FedEx (FDX) 25 Jun 212021 Q4 Earnings call transcript

Good day, everyone, and welcome to the FedEx Corporation Fourth Quarter Fiscal Year 2021 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.

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

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

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

our members open Fiscal care, Thank performed finest XXX,XXX commerce in to team team’s you, allowed magnificently and, was we Mickey. FedEx PPE, chains and and truly at-home The moving international health vaccines recently, flow. release shipments Company’s more unprecedented, of hour. additional who significant supply global proud to been ‘XX role industrial and perhaps enormously has are keep this

Mike Our say more and about financial speak numbers, course. Raj will of results to themselves. for the have

pride in a in members. XXth executed grief shareholders Our our friends Indianapolis FedEx tempered, facility among continuing is the the however, their FedEx eight for over Ground of FedEx performance at families, murder senseless and by team sorrow team our greatly April Lingering also level and been never be on a FedEx have will Raj were The in can executed carefully overall. we’ve years with developed colleagues a comment and over great success the tragedy erased. moment. several last throughout this high strategies at

mentioned our simply moment. pandemic specific we’ve which brought the Brie these a many the of trends, previously, more be strategies As forward. about in will trends market informed

believe FedEx As year. billion, were to will $XX FYXX fiscal We margins project over $XX FedEx we reported, revenues FYXX billion. continue for this improve and revenues

anticipate to will increases great delivering while when There’s a we situation great are future the of increasing successful significant are with cover ground volumes, volume year-over-year This will management, leading in the significantly market been we Above require the part and adversely volume creativity operations affecting challenging, To has network However, service as momentarily, Raj to significant several hiring peak deal capacity quality last And the season of focus and the both, deliver prior months has U.S. the on to over maintaining on our frontline quite team results. to revenue of All improving culture. members delivery FedEx. Safety the staff lack flexibility intently focused financial summer, reengineering while surge and networks additional our begun of on fall. we these improved at labor and resources. to our handle and in parts the abate,

give focus picture solely yields our of upside. However, on does profit a not complete our

of As explain, will partners from generate significant our with retailer Brie alliances which shipped stores. traffic, is much of amounts short-haul now

particularly Our Surround are Innovate initiatives Digitally gaining steam, and SenseAware.

member, exceptional talent, well further Cyber to by At this information A who Chris’ Maier National hugely growth which FedEx for expertise in about Henry’s the from since joined I’ll serve confirmed he Director. administration in he benefited him role Henry XX wish than We as have we call, Biden has and Senate Inglis, contributions and the and dedicated tapped. week, the to Board additional success. in XXXX, career and to for Chris conclusion FedEx’s thank our was recognized the and has more Board remarkable the service and cybersecurity our and me acquired RPS, loyal last of years been note, which we of important comments Let technology XXXX. countless an

will remarks, Brie answer we your Raj, will after questions. Now their which Mike give and Raj?

afternoon, Thank you, Fred, and everyone. good

moan stated, loss team of Fred members to the As eight in ground on the FedEx killed tragic April continue XXth. Indianapolis facilities at we

day: Smith; remember Singh; Samaria John to Amarjit Kaur; Karli we Let Alexander; Amarjeet me and member take Jasvinder R. Weisert. team Blackwell; that a Matthew each Johal; Jaswinder Sekhon; moment lost

members condolences these remain Our FedEx family. of heartfelt They with be forever and individuals. the sympathies families, team members of friends the will most and

full and short year our to incredible pivotal This our and for work outstanding members. due year. to Now measure year performance, revenue for a financial as Fiscal ‘XX the FedEx the a in by including record team delivered we no was fiscal results. turning global is profit QX

to get performance driven exceptional our by take on businesses and strategy look helping growth the execution key I’m areas: proud FedEx FedEx difficult role robust their three excellence and fiscal on lines, and times. duty medium thank digital front When feet of me team, and operational globe in The the to innovation. you going small call at say keeping I back this played those the was the in financial focused the beyond e-commerce, opportunity on and especially saving connected. year Let back lives, above for of these ‘XX,

Let me the each to take and QX. strategic focus area made progress highlight a moment in

Freight large expansion experienced U.S. and operations, deliveries, fiscal population of globally e-commerce. XX% of coverage on delivery highlight importance strategic This year Saturdays offering The including ‘XX to through-the-door of technology the includes win branded in acceleration FedEx of expanding e-commerce. in service Ground’s weekend seven-day reaches competitive XX% give better trends to with on Sundays, a seven-day the distinct in the full Firstly, optimize the residential our and to first operations, FedEx Direct ongoing Ground FedEx network. initiatives capabilities handle retail convenience items, us accelerating last-mile our advantage. that investing

day We demands are can every very of packages they with in e-commerce in so This in meet Sunday closely Sunday the delivered working year. saw is customers weekend of on last QX Ground to with the we more the evident XX% operations week. the leverage full of deliveries flexibility growth than

leveraging of shortly. our and cover this strength e-commerce details We will of portfolio. outside are expansion regard our also winning the United in additional the Brie the global networks States in by

second focus excellence. The strategic is area operational

by customer focus excellence Our operational marketplace a fueled is on competitive and advantage in service. relentless the

just our While challenges quality service recent facing to have high meet which time use hallmark with contributed levels labor team customers. The businesses, a over a our do as inefficiency create to to availability, has expectations FedEx, as to our volume handlers, expect service are we constraints rates hire inability is networks package not examples. of of wage shifts driven route that open deliver members, we many own to in particularly and we and known like few the higher around cover

address a issues focus as our density. increases, across including average to the up efficiency well service e-commerce to in providers networks. and per previous Ground’s rate stops prepare drove BXC the BXB which the these structure, taking of technology, the by ongoing investments reap business hour our number seen QX in revised QX, optimization of on fiscal As bold benefits last-mile for people, growth continued volume enhancements are volume optimization our service capacity provider reduction FedEx same both, improvements such, cost efficiency quarter optimize in strategic year. part as stop the with route as improve per Along driven in and and X.X% we versus to in collaboration in to made as improvements X% the by service year. Further compared contributed expanded These to businesses program. we’re last actions continued in technology to sustained continued efficiencies across our

approximately Freight miles In million packages year provided ‘XX. million XX Ground fiscal addition, for X.XX delivered and line-haul in FedEx

the with the in operational international Another in significant our TNT. excellence Europe opportunity starts integration improvement of further is in of operations, our enhancing of the physical which profitability the completion

the in setbacks basis, has of seen While a million FedEx set we attack day will $XXX the to million to including on annual cost markets. XX% European XXXX QX, $XXX due incurred will benefits combination from The from U.S. to marketplace of TNT of cyber introduced the January connectivity through nobody The to this the this deliver benefits European future. are the In of we and of $XXX the major restructuring pandemic, program, the value XXXX cash creates Europe, which fiscal for integration an in announced the XXXX $XXX certain that overnight in starting is XXXX. next share its matches. unparalleled be under be the delays an to in service in fiscal severance It’s range expenditures. million connecting in million businesses

for you the international Said As value the restructuring our our upside in continue to is while our business. of profitability tremendous. see, enhance customers, business can we European simply,

Finally, innovation. focus our digital strategic area, third

that and including, integration as and ID e-commerce with extension great and with FedEx drive Building execute customer technologies as and personal ecosystem, more value key in in Roxo furthering technologies, provide and portfolio which We we services infrastructure predictive like the month’s FedEx during continue this in ongoing Adobe vehicles the sensor-based continue increasing and of strategic Magento e-commerce market-leading innovation, will deliver new we proactive. as seen and initiatives. visibility are simple, illustrated testing strides products space, we’ll most open and SenseAware a on of In Fiscal vaccines. reimagining following to Nuro. We COVID-XX to in of on through a digital the our made transportation Surround, development unmatched notably are through excellence digital enable manner our of deliver experiences strategy fiscal life-saving of capabilities, operational ShopRunner capabilities that our on announcement capabilities autonomous to testing XXXX, XXXX

and operations peek capacity nearly First, in by automated of at XX addition the substantially key with facilities XXX enhancements. investing expect infrastructure, implementation technological increase we expansion for projects Ground’s to existing of new the this FedEx and

complete will for the improvement early physical in integration we Second, inflection profit Europe. which to network year in close will and bring the provides a XXXX, TNT calendar point air network integration the long-term

customers. and improve purchase we’re year increase identify exercising modernize year utilize additional efficiency XX service different collaborate fleet of our existing to XX we ‘XX network in to our adapt, Next, XX for to to for serve. options areas XXXFs, ‘XX, continue finally global to fiscal as and delivery and in to fiscal continue And and we our to elements cost reduce delivery

cyclical to despite e-commerce and the of The it’s competition. provides networks confident industry. critical quality year, to others difficult some globally. solutions net growth over value be It’s investment, When clear long-term replicate contribution of differentiation, are has e-commerce if and we a we chain. ‘XX and revenue year market improving building the it the provides as and We from advantage growth. innovation And decades of together, profitable our the that our over continue fiscal our and beyond. significant remain to become for of reflect Our differentiated on remain expertise very focused engine levers industry past will in all capabilities a factors, back anything incredibly customer

just In value innovation. margin opportunities. on we’re and addition, improvement U.S. unlocking the transformation efforts getting Europe domestic digital And generate started finally, with will in

superior, drive will With it deliver shareholder to that, robust returns value financial strategy for I growth Our come. FedEx to Brie. years to and sustainable positions over turn

I solutions Thank everyone. team’s afternoon, their our help continue immensely commercial business, our of proud you, strategy grow In the businesses. while challenges extraordinary Raj. to year to developing a execute of and to our ability be Good customers change for

our E-commerce way Fiscal Before across year-over-year year I ‘XX, growth. wanted returns exceptional drove solutions. volume also our was our medium growth to ‘XX. portfolio results business on reflect daily I all with volume our of Average move grew XX% into small year-over-year segments, customer through parcel year e-commerce U.S. strong across of in leading and fiscal of XX% truly the ‘XX April. very

With online, growth a focus ‘XX, expected with international by U.S. by shopped consumers followed calls primarily provide revenue growth. parcel market opportunity by and and years. outlook total flourishing the XXX for of domestic fiscal XX% In delivery growth. United parcel U.S. surpass this U.S. in year domestic to continue the grew in manager fiscal strength domestic users be market robust will coming market more ‘XX fiscal to year packages day a will The year-over-year. on growth, quality. calendar XX% backdrop States, enrolled is in the ‘XX the million FedEx our ‘XX, from in momentum e-commerce As Enterprise and contributing driven BXB U.S. e-commerce

calendar be million ‘XX. is expected market in volume, packages Amazon Excluding day parcel U.S. year the to a domestic XX

forecast we a calendar U.S. As day will fiscal a XXX million parcel was domestic FedEx the In market mix year that we year beyond volume package in year total XX% ago. U.S. domestic ‘XX, packages residential look XX% year reach versus ‘XX, XXXX. calendar

As fiscal volume. commercial we expect this faster to grow we significantly beyond residential than year, volumes look

will solid to inventories fiscal to sales increased we revenue and quality we Ground ‘XX, fiscal lows, e-commerce. grow U.S. XX% In fiscal putting is XX%, and we economy ‘XX to year. composite as growth retail relative this QX, U.S. In strategy. year-over-year. with yields reviewing volume residential year on we by yields historic pressure continue our when BXB yields However, note that will at yields by against weights in FedEx important zone domestic year It execute overall, expect domestic decrease,

adjust total and maximize our increased we economy prioritize customer capacity. to managing are sweat peak and for and us strategy capacity warrant. segments. amid as and the We zone Ground surcharges network capacity to profitability. our June our will e-commerce and constraints, our FedEx small ongoing have XXst, as Short pricing medium will sortation and capacity commercial, our support of assets and service network To continue we Within monitor demand enable strategy,

appropriate cover confidently will week while day We balancing product, contracts profitability. the and continue level lane mix ensuring to surcharges customer customer renegotiate to increase of This and at increases segment means our large rate agreement XX ‘XX. year rising contracts for three the in labor our customer leaving large the implementations upside Almost total years. are had half large costs. Most past of in U.S. volume months, pricing fiscal segment

volume for trade decade. its reduction surpassed Global course and the April, XX% of growth international. over down year mainly of year-over-year on remained pre-pandemic to turning levels Now Global in to fastest in has as capacity. is due passenger a air cargo capacity value

believe slow, cargo episodic, constrained to will continue least full of XXXX. pricing at calendar anticipated Recovery through a XXXX. internationally not recovery ‘XX. expect We is air first year the year remain until fiscal be favorable potentially capacity We a half through and should

continuation We management transatlantic will and using especially and of transpacific on demand peak continue to yield lanes. manage internationally, surcharges,

on very a capture seeing these surcharges. rate are We good

role growth. significant freight ‘XX, fiscal a the our parcel customer grew and not our and In mix majority and while revenue it was base we fiscal of played priority year in in improved surcharges our economy, peak medium penetrating versus While ‘XX, e-commerce. international performance small

to six has the daily our forecast. intercontinental flights believe being have fiscal result as network I and pre-COVID pre-COVID predictable Overall on competitively. our refine In said, capacity consistent, to demand be e-commerce when Asia volumes frequencies price This than extent, year volume $X to exports Europe. year In provide its a very more this demand in year-over-year to levels. will line-haul commercial able nature out include fact, eliminate requirements, large grew back. limited parcel to from quite capacity network commercial ‘XX. plans is and our Asia fiscal from recovered more some we nature of To ‘XX, based billion for for relative capacity our of does hoc recovered BXB levels. sticky. lightweight a we e-commerce prepared strategies That ad of to Asia were due Intra-European e-commerce by continue volume to and we come

reduced BXC volumes European lanes. to uncertainty ‘XX. we overall in our covered product intercontinental growth and back the is rise, expect e-commerce With economy significant interested our in on expansion. are activity both, industrial the on by very accelerated further While pandemic-related year levels and proposition. new service Europe Raj new pre-pandemic Customers European late to our overnight calendar to be value our U.S.

small the to strong mix and healthy have large of Europe a with On U.S. lane, businesses. we demand

segment. capacity this incremental serve to high-yielding deployed have We

e-commerce our compelling. Our by International proposition, is product, new anchored Connect FedEx value Plus very

and robust fiscal we for have to will beyond. and in stellar turn us We to ‘XX a to have the year Mike strategies customers I’ll In his help next that, summary, pipeline. win sales ‘XX, what’s over it new in well remarks. With a very we place had continue gain and

good you, everyone. afternoon, Thank Brie, and

Our fourth reinforce and and improve our quarter results momentum across our XXXX drive our capabilities, tremendous fiscal and collaboration business efficiency. to and growth the grow investments network reflect strategy in our

$X improved billion $XXX up significant into FedEx those increased our and variable our while revenue full year-over-year ingenuity the in demand, across greatest parcel invaluable through margins the And our the incredibly revenue work in with of XX% compensation basis quarter, higher $XXX profit the operating Our reward Yale our increasing income In include numbers, in expense adjusted hard University to that increased in rise members to to of U.S. support with margin results with XXX a members, points carbon contributions. substantially growth. most compensation the growth line. increased history. fourth to grew board. revenue and operating of and to as over XX% earned support their their grew the Drilling Ground fourth we the continued variable XX.X%. revenue million goals. was driver incentive we XXX% the quarter, Ground cost contribution our neutrality even year down previously in operating margins expense to for higher of was announced million quarter, took portion bottom the Consolidated drive team profitability team volume

full As our margin topped year, at They Freight U.S. and we international business record for adjusted $X billion also highest QX adjusted in up their business, with billion cash a continued profit operating Express margin by e-commerce our plans over out generated the investment and growth, basis XXX while the $X.X XX% grew the in revenue and time. in free in blew overall million income quarter last With first growth this grow, points. balance with revenue ever for operating year sheet. to $XXX pension strengthening our XX% the operating funding flow quarterly our XX.X%. balancing continued

billion fourth one we total transaction, quarter, During our a or outstanding financial extinguishment QX. our XX% quarter, of all and in charge debt the reduced reducing our the maturities by underscoring refinancing million FYXX In $X.X in $XXX resulted on leverage. transaction debt focus This debt in executed FYXX. eliminating through fourth we a outstanding liability, the and

lower efficiency growth record make the including on volume XX% years and will robust year-over-year strategy, levers three adjusted over This with earnings. optimization. that. yield the following capitalizing on of economic growth management, network business, EPS flex FYXX range a top we focus and global of transaction. XX% e-commerce. we provided highlights next FYXX payback to positive to the behind our continue will cost will our I’d recovery a it However, to interest all FYXX, drive on In corresponds growth, The operational

by We key levels, an several adjusted to our segments expect basis exceed margins FYXX areas. driven in on transportation all

and We continue we to Ground improve technology and as FedEx network well utilization profitability, drive new invest to as in our to facilities higher through e-commerce enhancements. expanded continue and will efficiency expect to

key previous even FYXX, total structures completion to also to further due estimate We benefit continue point Integration of integration us and our higher road. $X.X better to and services our launch for the the which forward internationally. provide milestone more opportunities in a TNT, than drive optimize legal physical automation. down of This be look spending and will to to improve slightly lower than profitability momentum offer will will expected better our entity is to enable from in and incremental additional expenses to identified integration billion, be back-office FYXX customers

revenue improvement through continued at expect strategies. We FedEx our profitable and Freight quality ongoing growth

of for members. team is expected funding compensation substantial ‘XX. includes a our not for our headwind expense variable to outlook Our That incentive programs said, fiscal be compensation

have we and higher ‘XX included shortages many Digitally rate reflected While about opportunities, in lower and outlook for labor a impacting and to of also is corporate, the Earlier, to will growth we our accounting in wage widespread initiatives. estimate industries related across clear talked for our The spending in companies adjustments. year. retirement prior rates our is our productivity, and be overall quarter, higher in recorded other is Raj the the particularly U.S. the through the largely fiscal first and us this the XX% Innovate approximately important P&L. projects outlook of these mark-to-market eliminations effective section tax Further, plan impacting

an remainder which projects this of incentive like part the expected our is is year expected with level reduce Express of Finally, our to not spending high growth long-term invest Express for financial in address all also only starting CapEx FedEx of networks capital a Approximately carbon or upgrades replacement ‘XX. aircraft, expenditures, hubs important X% our drive modernization which important will our is return, plan will the be target to efficiency. in continue $X.X to strategy our and half other key transportation capital ‘XX billion We’ll but to footprint. of which to for below aging have for allocation, to revenue capital our the is our be to our facilities of FY historical our projects in less to remains the and FYXX I of revenue, to intensity. with expected This capital component

will FYXX. the deferred we which replacement increase in vehicles across largely of We enterprise,

raised ended such, in in benefits We $X.X enhanced long dividend team our fiscal including will as our increase ‘XX, XXth. will dividend cash. add allocation the safer, June XXXX And projects term billion share, per energy-efficient on more capital as the and opportunities, XX% yield which We with near fiscal $X is announced for we laser-focused to term. these leadership equipment. All on

fully growth, expanding margins, our our our compensation in programs, shareholders. closing, Next, just the focusing spending to FedEx contribute sheet future say future. generating quarter, without we I was equity strategies to covered the delivering focus plan plan, voluntarily XXst. on of our our have superior having balance $XXX do leverage return, profitable sustainable stock our improving program primarily million to funded restart we FYXX flow, on the return by to which in offset increase results effects returns and buyback during plan our record first strong can confidence and we place, dilutive to in and are can free value we into pension and strengthening which adding quarter continue and the that with In cash cash XX% May driving financial of to Based capital areas we greatest expect revenue to at shareholder fourth

happy Next, we questions. will address your be to

[Operator Instructions] And from first, we will go Brian Morgan. Ossenbeck JP to

wanted Good the incrementals considerable Thank operating for Obviously, of questions. the the to here year-over-year. guidance. Ground in could see color give as I you taking relates afternoon. margins in leverage Hey. if Mike, you some it to terms some

is trucks, way clearly, You’ve some the but right store, package, there right system. through inflation talked its the about right working the the

us does guide be be we which you costs. those bit Thank a also front-end on you’re side, to can So, and to to double seem about offset outlining might that what would to you. the about less if think address that bit able you little or to can a surcharges the inflation that of little some loaded? maybe digits something install So, considering on than you way teens,

is of as kind said, it said I’ll way. part dramatic of few hit Brian, in pandemic together and in accelerated, e-commerce, to different at growth first rapid the we’ve the the things shift well, still we’ve performance reiterate a the a an just the and maybe But, Well, and in try and been and as tie e-commerce, along way pressure which improve Ground XX% time, same noted driven some ADV astounding in stellar. put as areas short increased the by we margins. really nothing you why the ‘XX there, of at has

highlighted primarily execute and that in continue -- the Brie parcel e-commerce, we’re strategy by very will against So, confident driven that. to U.S. primary our to growth be domestic profitably

improve the kind we to beyond expect enhance So, continue facility utilization we and ROIC further increase as assets. exceptional ‘XX the of and of I is aspects Ground our productivity, those margins. margins density, emphasize generating on-road to And improve in as

we’ll surcharges that we very remain about as so, differentiate And innovate to was future well, can the confident there. There the opportunity, something asked of and you and capabilities clarify continue you maybe that.

they’re Yes, right. earlier were and a for last some competitor saw than also announced that week Earlier surcharges bit we your year, this main peak season instituted higher.

assumed in can inflation address and the you here. the this with So, you that maybe guidance as well you’re talking about what with capacity in system, the

believe speaking. It’s Brian. that new to a surcharges we costs. pricing Brie a and of perspective, our have are that pricing From to align Thanks, kind our structural we peak normal

we that covered do surcharges. there I’ve that anticipate think I in calls that will be e-commerce every previous peak

surcharges market, changes now, we that capacity. and and evaluate in make As have and changes to implemented We peak already some need environment. to we on June to based XXth, continue we right demand monitor -- we the we on continue

And Bascome to next, from Majors Susquehanna. we’ll go

Your line is open.

from we’ve -- partial to pricing you that how mix stable in seen more and comes? from profitability whenever your protect priority environment. both a that we’re Can about the inevitable, customers in talk the little a clear this all scenarios being more exceptionally well higher-priority environment and reversion bit products when sustainable and demand with best pretty higher-yielding, doing one you trade-up logistics of of It’s

question. take Sure, to the happy

to have market we think I market. domestic and between the separate it the international

the me numbers heard you from just U.S., perspective. Here a some parcel quote growth in

in we capacity the but domestic we very environment, have to mentioned, market, So, we have full for cost. use while proposition our think to sustained to a aligns continue make outpace pricing, I quite to will that as Structurally, and think in frankly, really not cover quite surcharges, demand sure the growth the best will actually We package our we only market. large stop. just value peak,

best weekend coverage. We have the

so, be And some demand for planning here think time result, are the will a as domestically. there we for that quite we

it’s will not bit takes commercial believe, of as we that than side, a a I up and we complex. actually XXXX. international the have, On do it my We that customer be a capacity remarks straight base come The to is Episodically, line It price. back, to little will at competitively have believe, future this longer priced. far come it longer different growth capacity story be very commercial for until to mentioned, back. going is quite we priced we make We that this sure sticky. sticky. volume had e-commerce e-commerce. It $X out was opening in the very pointed in billion frankly, I more

don’t we our business risk also there small in had any growth, internationally. we’ve there’s believe So,

sticky. volume We is that also believe very

So, cost overall, as to about commercial bend We’ll them. network. the feel capacity But comes implement quite time to some we curve some back, have we’ll surcharge risk. offset of the the adjust and we good strategies,

Becker to And we’ll from Cowen. go Helane next,

time to likely on? more we’re robotics so is and two is, automation more use expectation good questions. the My of seeing the and aggressively -- So, the labor that to I pivot continue, and given accelerate question the first implementation have shortages this into that a it’s of

CapEx on. Well, I’ll you’re of aspect about that broadly of Helane, facilities, is that more the raised. just Raj talk amount is which broader this you the the what Mike. efficiency it I’ll give is to within hitting to point enhance that good highlight to exactly a projection,

technology, routing we improved. we I want make get it and remains wages, from that our possibly it Well, I labor are everything sure whether with is can think is make from that that to the environment now. associated to do, challenged all can the we things from right And here point doing service

We expect situation months, Thank opportunities we the terms as technology that gets are two, next for about of of And you. Mike that over course, ready three peak. get that in considering longer-term better we talked well. and that

Ravi from to go Shanker we’ll next, And Stanley. Morgan

a probably color through bit us the then first half versus next little start of Can the the back a like, look of of a harder given in quarters, ‘XX year? of couple that fiscal continuing you what conditions half bit, I’d you pandemic halves bit two some second of have the give say, comps the little getting the fiscal little half, on but

Yes. year like. we the Ravi, estimate our look, what best giving of middle of think fairway looks we’re the

number you of parts. highlight, there’s any As moving

for But I in requirements the and and recognition productivity want as various along to still way the are the as, in labor the and keep layover that. have try So, network the parse make continuing there. as mind, well challenges we well to that to accommodations elements don’t first quarter with air certainly, here Express impacts the

number So, aspects there’s a there. related of

of I’ll it what’s that at So, terms leave play at in here.

And Vernon next, we’ll go to Bernstein. from David

us productivity So, us how getting to kind Mike, impact, in the to a that in headwind the both labor cost just network? little can there of difficulty a would extremely up be, big kind the further anything impact helpful. marketplace [Technical that help maybe or like just the dimension way sort to Difficulty] dimension Is into would you’re the a -- bit and and that wage to that. give the would on inflation follow overall be of seeing of from sortation you of in I’m trying

you I many that throughput staff of with, maybe to facility would density when simple your break trailers -- into But the when optimally the as is course, mentioned not getting Well, might buckets. don’t in within then, down it earlier, these amplify have and people the otherwise you’re -- expect. you then could we people lower, Raj what that wish you as

getting you’re the that. the cost incremental then, So, haul of network, in in running terms line there,

simple exercise adapt, us have short, a iterative, percent and this we adjust as way and not Y around that’s that. rate is it. ongoing of X saying, head impacting It’s and okay, configure it’s to wage as we’re So,

So, that’s how managing we’re it.

And next, Thompson we’ll from go to David Company. Campbell & Davis

I marketing curious share LTL know sold a was any just Canadian impact the expected their on your your few to a in LTL business? of ago. that Is you market have to division months UPS company or the

Well, David, is this Mike. first,

Freight our results business, of is value the I just and commitment given absolute. that to, our spoke say, just me Let

forward. Brie I’ll the market what evolves So, going think let address we how

Well, doesn’t Freight strategy. honestly, our this impact

because market the the leader best are have share value We we proposition.

with just our to did Freight share threshold, share. while introduced a they they have. intend managing We that growing we -- the is we Direct in team. They share done across grow product, despite with with rapidly. have customers, FedEx addition And tumultuous the tremendous year a a And that, Freight year product new had have the job grow growing our our small and to residential stellar

we tremendously to our about course. excited So, are stay just FedEx and Freight division, going we’re the

Schneeberger go next, Scott from to And Oppenheimer. we’ll

that to tie the largely it quarter. like On Mike, you it’s looks does affecting mentioned in also as Freight and labor first well, topic, this

guidance get the a country first of curious think at about you I’m this confidence were looks of the whole dynamic the or the conservative bit you mentioned in color labor of customer that considering first on You bit say, if how occurred the that then, a on hope for by, largely in comfort how you’re ends but had curious and same adjusted more back little the like color hopeful a much more alleviated, summer. and you that’s it is, just question situation? you maybe little and your And But to good you some is I the end quarter? end quarter. could of that’s it put your thematically Freight, follow-up but what suspension,

markets everyone normalized -- we’re fall most. more to that it not and of that Freight, kind the take It’s the a I it’s highlighted. at moved will the swing all Lance, first conditions. we first our I’ll is a has Okay. look, of aspects the mitigate general And the phenomenon obviously, return -- into it the impacts unique and the CEO second the give the Scott, as in quarter expectations part, for then the this experiencing. It’s part. we to that I’ll mean,

see day, at consideration beyond we’re workforce. October just have you people -- there’s no it a look, So more unique a Lance? there every but September, lot expanded come that we’ll suggesting of

want exceptional an Thanks, They been gets recognize successfully year. in my Well, ever I to opportunity in to XX for and grew seen questions, since and our ever up has have Brie’s this Freight almost challenging team years year most comments I any I this it. take add Mike. to hardly business, in what the battled through

to the I on put Board. of recognize they all the So, want points

the trucking spillover LTL it. have all with several times of you sure they about full, industry, the And multiple large the X read articles into written last use divisions. I’m and get truckload when carrier, majority We tightening the comes the the the it months are LTL LTL. over starts Now, They size sector. in the the get of the

actions backlogs to and with what temporary taken to the the notice, we any targeted to embargo have so, minimize balance and decided an volume avoid the control customers, drive broad of you have the And when country. competitors disruptions all our to combined the it without network entire country sections entire capacity impacting implemented across take

to business force some record be has reduce growth with So decisions. come our our our but employees, protect to tough necessary continues backlogs business our behind driving This and to the decisions volume. staff

the hope wanted provided Now, in going forward. I we’re hindsight, transparency. this, make quarter taking avoid and like the it I decision would not that back to to have a in measures

And next, we’ll from go to Wadewitz UBS. Tom

provided in you the on some comments domestic market. -- pretty commented view you optimistic on a Brie, tightness

normal I dynamic approach kind pretty momentum that you’ve important and Would do look you in continue. I that going as And the of about margin driver per think expansion we at it rise than about I to piece continue think as the in had How the do is continued years? gains mean, think tightness at revenue we would of How the pricing in to think expect the Ground? of businesses? you a next Express fair couple was expect view ground. tremendous pricing, to pricing? is in to sense that XX% stronger package domestic we pricing

Absolutely.

going think than we you’re our a a year-over-year ‘XX, historical price from average increase. and ‘XX greater at look absolutely see that to we As

this mentioned repriced at of did XX% I volume, we actually As customer our of that quite this year, our the year. of most segment. we large about half look And back in when past we domestic frankly,

have So, some we’re to going lapping.

new this You’re those of going the of half fiscal to year. benefits renegotiations back get in

to We’re in front the half them ‘XX. going get of

top segment. about not very, just have to addition, It’s cost. the very rest matches about that getting peak. the structure there, the those sure the importantly, the on large surcharges, In peaking we’re highest they our have have for pay as the reprice making very package, customers And still it’s customer incremental labor have yield. mentioned, sure And Fred right of that really price the really right that focused disciplined, at line that, factor we our that making really large

aligning I’m with after we about momentum think going it’s it’s the tremendous do just so, our clear, about about, am and have but quite frankly that year to I -- line, and well. to our strategy which not that And want I as the be is next top really price year optimistic cost,

go next, we’ll Wetherbee And to Citi. Chris from

on up point. follow just could I Maybe that

seems you market, So competitor on correct major -- if biggest seems and market. with And it are in the tightness the you and can I’m wrong, it the your capacity influences if out cost into certainly the and go sort in support relatively that pricing should maybe out capacity of over above the sort of meter that can couple out environment, inflation course a year. as the you of it we years, the of next robust me

those sort impediment some maybe back potential margins away bring So, that take to opportunity them that of had we a domestic I from other we’re where years guess would thinking the seen match really couple environment future? volume that what robust there to with about, of a ago? fairly very, you up for good the foreseeable and that or is maintain of just just to trying is outlined this very growth dynamic a capacity pricing Is

Ground units focused aspect legacy about talk going Yes. hubs. smaller just at back when on historical the too. capacity, of large CapEx one let highlight The me than is kind we Chris, growth

zone We have to targeted one it’s growing this shorter a efficiently and effectively opening, but of demand. on lot execute

align about course, we pricing -- the cost talk when it. about matched thinking why pretty on that’s how comprehensively. investments that’s is the to think, I demand so, we’re has which And the right has there with covered, the of then, to side, having as Brie where And be targeted going,

that in go and on well. discussions the and that the as assessments So is again, Look, it’s of team part an process assessment integrated finance here. planning

operations, very pricing it’s finance, marketing. So, sales, and a integrated with

really team a the has focus. So, collective

And Atkins from next, go we’ll to Jack Stephens.

to or a longer UPS invested valuation multiple capital found earlier very get a to XX% invested Mike. month, past, about sector. question we correlation its versus today. XX% return At within to stock Raj term Analyst on this But, capital a the return on XX% in out plan Maybe laid high a between and its transportation to for either the Day up

is capital and X% LTM on between Your invested X%. return

you look Mike, So, FedEx realistic target the think over ROIC out for for is do would you what years? a three next

today, Jack, I we’ll on will I’m reiterate investments targets expect business the what that segments. sort a continue confident any return in we to guidance with the gone capital. that go of not beyond invested making, to alluded generate the we’re margins highly all that we’re or I out put high we’ve see but going grow to And to fact

that’s what to seeing keep to continue we the to where want do it have to get trajectory. So, that to we --

we’ll that one. leave where So, I that’s think

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

to don’t I about BXC And inter is and could years. to of with was recover. benefits Thank where mix, us pricing if XX or just period the for of just Company I days density give separately, or customers. the to at get on know change have I an pre-COVID, up relative of sorry, it see is you’ll it, three the -- as to process where then share continues every mentioned recontracting Brie, period? kind missed notice, you but really just the the you. this end just wanted you BXB BXB XX the Henry, to runway you can today just Does if BXB talk some -- some I know ability come contract they enterprise

perspective, So, contract very-nuanced. from contract each is an enterprise

demand. for of out have increased contracts opened looked when cycle some has customer We the

of And different so, have than going average those to we’re course, something when want of conversations. been our do of what with to kind they course, has them, historical

to to really it’s satisfied yes, to really Yes, think happy, I we yield, we want important. also want our customers. our want price; have grow we but grow

balance. trying strike we’re right so, to And that

health many them in customers, some to their care. need portfolio, because retail changes our they business in in segment our so, a change yes, meet in saw especially of mix require of And and, their did growth, course, explosive

have necessary every the as course, Jill Mike of and run get together, and to morning, and as we reopen and I what’s review business. do those So, mentioned, required, account Thursday Mike we conversations

team very the been has I’m that agile. pleased So, incredibly

I BXC. think about second was the half question and BXB the of

make think I a answer continue Express going So, to domestic express. the perspective to more from is are we

We’re lean commercial. into going to

to health -- to continue that We’re about optimization last-mile going lean network. very us When some strategy, into which our optimistic to into premium. And will care, the we allow we’re residential put business was Ground since guess September and other the in our of share year, I past it absolute XXXX. volume this if thing is I can highest May the in commercial that you network domestic look

here United So States. we’re of very confident business about our the commercial in the return

the market e-commerce. mentioned, I be will growth as However, of XX%

no be will within BXC there of the network. Ground so, the And volume settling

that drive continue growth. to We’re to going

to lean while that. We’re it, to yield. mentioned, do is our going goal grow margin we into as Mike the grow And

very, So quite into Ground. FedEx lean e-commerce frankly growth very, the to for excited

asking This the is or year. thing Mike. one add that should for are I about sequencing the trajectory you through of those

QX. expense compensation I variable As accrued we million in reminder, mentioned a of that $XXX

add prior to billion gets $X so you Qs, And so, the and up if you or year. that the for

much uncertainty. we QX, not last amidst the as understandably So were accruing year as

in think that keep as mind of kind just So through. you about modeling

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

Express, but what of what’s the lot a million normalize talked that, maybe as you the about the the TNT for with just aircraft Express? into TNT detail we Europe an $XXX back at outlook, the and integration, facility the Ground side? the rebound within in time update if the FedEx then, to well? And So, package Express on So, of donation, about blending to Ground, both the the progress efficiency, double-digit get frame network,

milestone, number highlighted. helped is that and comes and of a enhanced commercial road network Well, air had milestones this year. that of the I’ll We the completed enhancement, -- network. facilitate there’s end the the was another proposition We again, fiscal key TNT. that that toward been And the on

this into ‘XX. coming the value as we there’s hits So, with that stride business highlighted full then, And year, more realignment, to come.

So, significant increases and it’s a opportunity there. multiple year of

add we same improving unmatched. -- time, about. just where like about year at continuing value our just I fiscal talked improve with Europe overnight service the about -- next very to point, are are the we to talked And Ken, this inflection U.S. one markets this also combination from TNT, me in of we integration an you let physical is proposition, several the calendar to the is year I excited and that sit year

beginning think make should that and FYXX. we great in continue to into we we And ‘XX really margin expansion building see the fiscal So, progress.

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

So stop per about lower cost Raj, talked at you Ground.

volume related how cost way stop last-mile So, to the improved you in operations? was mix might driven is increased just utilization to that be much ‘XX. the we gauge BXB residential out could there asset density seven-day a if you. of to by improvement from versus increased and maybe address parse Thank And optimization, able then, e-com how per the fiscal in

I’m going to that answer have John question.

the thanks question. Allison, for

Through we back the FYXX, of delivered go fiscal of you XX.X only we talk LMO. packages about LMO, delivered LMO. we million when million packages year If ‘XX, X.X

factor factors product, that’s residential economy us and you’ll and all residential the optimization. improve integrated Now, which improving our surging since is our next, if one our the plus now these has remember, The growth that’s helped density. SmartPost, we pandemic,

we for matching commercial, package, they’re this the continue address packages expect another to have and of things or residential, package fully LMO one or increase. where continue where nearby seeing destined the to we’re address Ground Now, economy to we to same remember, to

reaching delivery Saturdays competitive weekend advantage. U.S. on population gives which that XX% residential also us our of Sundays on the We’re distinct truly is coverage, confident a already XX% mentioned, and

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

One here? level that really guess, side, rest still sort starting year it I a balance abate, noticeable to of the to we increased sort would that’s supply continue as that those impact or of through maybe of we’ve to something side of of is the particularly the have And had. volume the move on you of the the constraints is this you? on chain that issues is expect, Express been, and the this volumes manufacturing one, heard the Is

real. course, constraints chain of are, supply The

The here other ratio. thing to an inventory keep is to the mind in sales It’s low. all-time

as especially supply as the opportunity the to so, grow do chain the Express here, we organized the very, not I as because, -- low, inventory have fully starts expect a ask ratio it’s If that still drives still question. business especially the hope lot very traffic. remains clear. not, the on sales if express And just we side of to of get again that that answers and and

sort Express normalize you’re sort not part just the like ratio of few The based over fall be starting might as issues to seeing that of of And had the in somewhat obviously, months. next it time here? it, inventory sales some past on to where of day off is we’ve

sort this noticeable Just wanted to of and if at was volumes point? the seeing that know were you

you do that? Don, want to take

the only are inventory side, One, that it and factors materials, finished that finished not into has by Sure, and yes. Raj not i.e. you The on intensity the raw of it’s other and chips driven abated, demand is things going products. product, both mentioned. it’s but

remains historically that abated. at So demand The hasn’t low also levels.

internationally, the that demand of that strong. then, trickled ocean so, is optimistic up factors the seeing, have the -- change remaining the what And down to being both in that and domestically and short-term certainly, continues that seeing. be has And trickle effect, no we’re combination and us extremely cycle there’s both air light, in the supply we’re

seeing that fact, our I’m of intensification international matter of As a business. in an

Bruce Chan our And Stifel. from from next question comes

there, your moment, expanding to a seems commercial specific looking also back It to in but I like opportunity at meaningful more as go some for well. want discussion for Brie, maybe a to region of the that over pricing competitors you but are Europe.

same land is, front any question between my of grab demand develop here signs are of and differentials you’re or U.S.? structural seeing So, sort any the pressure capacity that in a seeing or seeing you on pricing the are you competitive

as a no, tremendous the actually Asia, perspective growth billion e-commerce underdog. between and we’re the perspective, I of an kind Great and intercontinental. from momentum, European We see that’s and from $X Europe question. mentioned, had have And

look at already mentioned, -- we had, So, have number when has now we strengthened Raj Europe it one, we we business, even but further. the

We perspective, Europe value is United proposition. have and commercial into excited the about sales coverage across States that the a the really from best team

are BXC the the United So, intra-Europe on the BXB both, predominantly share perspective, focused BXB. From and have into States we from upside an potential on Europe. we market

We’re just potential are seeing in we upward theater. yields getting going intra-European on and there, the actually BXC, but we also see improving

And to intra-Europe from then, an perspective, optimistic. area So, third that’s feeling focus for from Europe, team. we’re our the an European Asia

lane. that We have in historically been under-shared

seen between share our teams. Actually, our have European and last We tremendous a relationship our taken four has Asia Asia quarters. from the team DHL

with pretty environment, pleased really see see a and pricing So, momentum. them. some we’re We strong great we

to And to calendar will expect Bruce, can go COVID-XX, add. this some year up to next markets but one. back I European if ways, them just levels post late what versus the the are we we bloomers, now be pre-pandemic In thought be

So, a in there’s we And are again, position good going back think, very for BXB demand, sooner. to that. coming especially be the I

have ISI. from we next Evercore And Pfennigwerth Duane

where Ground you investments? headed. as is by your talk you investments, And in facility think facilities, talked geographic Ground driven utilization do which about of churn How exit demand is the What does from facility? to assets? Can like you look you about to any focus ship being a On tilt the smaller there existing those? store often I your

John. It’s Duane. Thanks,

all, re-mention but of this, about adding. already that First we’ve the let me brick-and-mortar we’re talked

large not up sortation regional very we’re as stations, capacity. already we’ll But that XXX our we’re that’s this automated our We’re mentioned what and facilities just over four California, expanding in Chino, end as of adding been with new facilities. XX a well attacking year how existing hub

to provide multiple our preloads that in critical Also, these huge addition, data expanding solutions using play collaborating multiple going that for we’re is solutions streamline full to flexibility like building. an as us to these our for real-time how operational existing work. And maximize that enable of aspects in refining for It’s us optimization. our quickly also both We’re we that to of reach that tools leverage are help and to e-commerce the we’re on solutions when buildings, a seven-day the staffing instance, mode here. well customers use local will when package also as solutions run existing and trailer technology way through from to shippers regional benefit customers, and with expanded operation routing our as allow them as operations from the cost solutions all And well effectively. will their we’re our

here. again, that. showing can how of some I retail exactly point is of growth, online can And tremendous if bet long doing. the strategically growth. I’ve retailers online stories see Duane, when we’re And we right customers talked you as that’s story strategic what there behind about work answer the the And you a FedEx see with they

from next Alliger question comes with Jordan our Goldman Sachs. And

might and sort growth of at it looking the preparing given investments what outlook a type big obviously, in number, Ground strong sense give in you’re making for Is curious. mid-single-digit the Just a peak, Curious, picture of Thanks. better? you is facilities you can terms and year-over-year there automation volume against, perspective? -- be some comparisons, what’s difficult of

we’re peak. Well, pretty robust expecting a

Shipathon. I think year, called we last it

I we’re Shipathon, quite frankly. forward think looking to another

the Ground in absolutely network, growth. a robust peak in are expecting especially we So volume

opening goal and partner, $XX is think the his I in at the across remarks, my Fred the billion And number. we’re pretty table in over mentioned for looking commercial year. I’m Jill, confident that

I’ll you closing for it back turn remarks. And to

much analyst this very for you call. on participating Thank

his the to were I’d personally RPS roles key moment bought Henry this time to pivotal organization. like said, we until Maier points Henry’s dedicated thank service As to at I take today. a for various from

is our enormous is awful lot that, going very day. your topology and talked I your the basis today arcane repartee, Ground if and be networks a substantial actually the due and continue just many, remarkable had leadership to thought was lot is area FedEx time I I’m of that a to it in Henry to as prospects would other think, operate. be about fun, with an Henry of very of and professional an going insight, quarters, personal back and growth entity poorly looking of and and amazed because they with with we which the even understood, on we I’ve many how you and in

on us, behalf to of So, and And all a you done, all deeply in retirement. well wish success grateful Diane are you. of of great us and we

we’ve So, me the the In Raj, I’ll one let format questions. made call going and of next announcement. any going our forward, that run they to can time devote this we handled, will be Brie job which needs size of December and will to reviewing give the reports, administrative of these Mike. just midyear minute year-end calls. to be and end and to by Brie June their SMC, to as back this railroad with these operation adequately rest in rather and to calls, Raj them answer order because The call decision day the we’re available very Mike quarterly every the handle demonstrated on than scope these

you, back So, to Mickey.

conference free if you have much. Thank FedEx. Relations questions on the FedEx about your Investor call. anyone Corporation’s participation you fourth team very to quarter Feel call you in additional Thank earnings for

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

disconnect. now may You