FedEx (FDX) 23 Sep 212022 Q1 Earnings call transcript

00:03 Good day, everyone, and welcome to the FedEx Corporation First Quarter Fiscal Year Twenty Twenty Two Earnings 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.

00:22 Good afternoon, and welcome to FedEx Corporation's first quarter earnings conference call.

release, website Q at earnings are stat quarter our on FedEx.com. first Form and ten book The This call year. is the replay being streamed from be for our available about one will website where are XX:XX on Joining the the today us media. members call of

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

Chief and VP, most of on at the financial Mike Executive Lenz, For for factors, call views Relations XX:XX GAAP call to and and Raj and Joining President Brie will measures. Raj releases portion press the And SEC. directly please now Carere, Subramaniam, COO; our refer his comparable today Executive the us Communications with quarter. additional measures on the of discussed are website these on share our the CFO; Officer. VP Marketing filings XX:XX reconciliation Investor GAAP refer a Please on the to information non to FedEx.com this

everybody, call. you joining Thank for Mickey, thank XX:XX and and afternoon, you, good today's

in I my members exceptionally to like an would global customers challenging deliver to sincerest foremost, team thanks for environment. operating extend our and First who continue our to

availability, demand FedEx our which for move We continues to for forward. manner supply continues high of execution proud of drive strategies services disruptive the capacity despite Team are and the grateful to and The in the impact industry world labor global our differentiated to extremely the pandemic chains.

first demand at digit our all high businesses look limited strategy. increases by The our capacity, across management performance driven impact markets business revenue with you our was As by the and the results, transportation issue results facing quarter in biggest key of and double highlighted constrained yield driver many quarter. first as of in than labor lower was companies remains our our world a around the other expected our

labor higher the FedEx frontline labor wage illustrate markets. XX:XX results particularly will Labor dollars share on are FedEx As impacts a share is rates more of pay was inefficiencies we our from The like our higher for competition on momentarily, higher. distinct Ground. rates impact for to premiums more four in talent, Mike driven fifty in approximately quarterly two have impact that To While this, operation had Ground. brief our widespread shortages detail business. million shortages significant workers the and XX:XX estimate have example our at wage the from primarily constrained I'd

planning shortly. thousand they service is our detailed but demand the team sorts labor XX:XX levels. efficiency (ph). only and and improving [grades] on drive even operational is Across hire bold and higher These XX:XX percent its on just the negative be must driven there service hundred cannot persist normally cost Now such results which the on because hub the with in strategy amid environment. the impact as operating cost higher we're to we case, in continued to these do network customers to to be our premiums, pressures ninety one the needed these conditions peak gradual will enable increased volume anticipate hire expanding flow diverted shifts, packages This efficiency five are that’s Based FedEx staffing having improvement a as being in diverting normal on the turn in actions approximately enterprise inefficiencies calendar miles such, action and party percent Portland delivery alleviate running rerouted include to sponsorship September handle from the XX:XX teams As staffing We Covid national on meaning XX:XX processed operations, new through I we execute the for has the first combined Oregon weekend day as Portland, shortage network, for on of the day one a prepare as into our pay and members drives sixty twenty simply During it peak; invest and ahead positions Our challenging targeted ahead. the transportation we XX:XX bypass additional reimbursement, not our adding peak impact frontline more we our pronounced included use us this for additional inefficiencies actions, of impacts across taking staffing expectations this volume, affect and which standards. And utmost of in our labor five I line a volume. costs. of Overcoming volume touch anticipate to challenges operational hiring hub example. with congestion and operations the also retention processed, priority network which incremental inefficiencies structures routes, XX:XX and Ground in particularly entirely. year. haul a would third team as that efficiently third to new meet more and our to than tuition a to that's of These we the illustrated to navigate market six quarter, turn thousand merely our rerouted. seek twenty as capacity, to of with season our

planning the QX boost capacity, increase to continued e-commerce in network higher as we efficiencies XX:XX As to in package enhance networks. volume its last new help see a packages hour we of to last FedEx them in large customers driven further to optimization close capability strategically route and of to increase per hour capabilities two state peak service continue efficiency, to year XX:XX improvement which move August. are located also expanded speed began up demand, As and by drives has point with California, mile Our ahead including operations physical with our the art to and continues package four challenges. in includes FedEx the over process daily hub Chino, congestion sortation, thousand per for thirty Ground automated build hub season solutions ongoing strategically succeed. to the Ground compared meticulously address QX in invest year to technology. year we This to percent collaboration fully thanks into to investments QX, of delivered packages our port enable footprint

This previously as the European hub long by significant transportation brings fall, Liege multiple hundred one bold safety expect capacity are of remains the in to ground we several In of due as in addition we're Ground’s network international highly physical confident announced navigate into this and per partners will the increase close projects remain ADV, completion through Network upside to integration investments differentiated of XX:XX This the provides volume summary, We are a profitability two. its completions moving mentioned. equipment transformation. agreement the spring to of with have on European completion to capacity other technology more social milestone in Several peak to network including when help slated We is to twenty our profitability higher the taking one our is FedEx FedEx We this term and regarding track expansions compared XX:XX XX:XX which network combined our the sortation, than already in term significant than reasons. will shareholder in environment. the peak. restructuring resiliency. fast total very also TNT new includes infrastructure. Air this intended in a actions average capacity for return short the Chino with in management systems, substantially which portfolio well strategy daily key benefits have of for uncertain of of forward. that automated market. at attack an increase the and the addition following modernization our growth I and Ground’s in strategy operations to and significant committed improvement a thousands a important e-commerce operations. to for services more flexibility the facilities sortation a last reached Express integration, the Another the our our season, growing million XX:XX dozen of XX:XX Air bring to We That opportunity express of XX:XX twenty in International our This

business us the regard. Our very in successful be to framework gives this model

a FedEx. working deliver end In - for the fact, to win for we win several win consumer win-win-win solution with retailers for are strategically retailer, and

assets, for upside efficiency is to improve Further, the that And inflection opportunity by our hence for our FedEx the of For drives better there's our day to collaborate physical growth. increasing profitable the utilizing and instance, volumes XX:XX retailer across we from of value of data our unlocking in predictability combined point optimization our international Europe we to residential stages recently grow digital partnered are in end integration early large XX:XX Another of innovation. and a create a operating common completion with assets. provides an in a companies definite enhancement finally, as platform visibility network, customer. to

years We as turn smarter to a for of year improved move this it positions part fiscal is With everyone. me chains beyond. work over are twenty XX:XX for us two in Our Brie. success play we well significant that, returns as that strategy FedEx will confident and come sound to let make supply through and we for

XX:XX Thank Raj, you, afternoon, good everyone. and

forecasting strong revenue results one a We for than market are in shopping reflect twenty year last and healthy year of hundred a parcel percentage over slightly in the saw positive pickup online with forecasted very one twelve percentage spending pricing double two, commercial fourteen fiscal percent. yield These a two, growth quarter parcel our decline. day growth These to in-store and of and we improvement markets, percent store backdrop market FedEx U.S. calendar are XX:XX revenue services lower digit quarter very ninety in to by was as shift increased. course, in growth a e-commerce buy twenty year retail as of packages million which grow is and segment. will projections first twenty environment. Transportation the that For year results the pass Our dollars. billion Further, including to were

growth, volumes U. by a flat However, over delivery e-commerce year package At this five of manage proud Express, very commercial growth percentage e-commerce forecasting U.S. retail will over six. for percent domestic a market home parcel volume seven of increased XX:XX however, as first our we are moderate year. percent in twenty were domestic relatively quarter, and Total At quarter, total capacity XX:XX package yielding continue FedEx despite S. proactively year services. higher growing total year U.S. annual change rate point healthy in of in our as secular the ten the We grew I'm one through percent. volumes Ground FedEx growth. volumes twenty the drive market domestic trend to

bring quarter BXB the rebounding of XX:XX volumes quarter. year twenty opens. first economy was to both in U.S. capacity to U.S. mix revenue higher commercial huge the twenty momentum. ago. continues quality FedEx higher, has continued XX:XX continues to however increased XX:XX the constrained out Ground continue package recover In FedEx U.S. the mix our a two Turning total Freight favorable remain to both inventory sixty volumes very percent team. now and fiscal double revenue two, shout by grew strategy. led FedEx three team, fifty year a versus The domestic of QX to first volume BXC to incredible pre over great and international and year in year quarter pandemic volume digits two job, manufacturing fact, driven improved Direct twenty XX:XX FedEx with environment. Freight revenue mix In as levels. quality, pricing percent than fiscal a year markets residential domestic the increased replenishment In BXB as the seven Freight FedEx in percent

and on focused segments, are protecting volume and high medium ground in growing segments. and yielding including We commercial commercial small

incremental providing FedEx announced and January contract We two, to yesterday increase percent. nine rates twenty Home FedEx Delivery customer opportunity have shipping capacity XX:XX FedEx an improve an Express, As average procure incremental ability renewals at point Ground of current an large and will large yields twenty rates. third, effective to by five customers through market

an Freight point to nine While point average percent percent. seven FedEx rates will increase five by of nine

other We also Raj surcharge International. increases com. to will which the Turning FedEx. XX:XX that now and can with the just capacity These balance demand to increases from XX:XX help be outlined. announced costs found us on mitigate increased continue impact

We the currently to are be this significant for and us continue have by such, a twenty share, billion five. At to remains FedEx, pursue. forecasting market opportunity to market cargo calendar eighty more as air year than single we dollars digit twenty growth

international four. full twenty ten recovery Capacity high to a from improvement package at XX:XX a we benefit half to improvement We strong air least cargo and remains demand freight two pre we customers our It not the very replenish compared calendar Globally, quarter We Asia pandemic our as capacity recover year flights, intercontinental four of continue priority constrained to cargo in ad twenty international with in percent first peak six parcel of will until in reliable the continued season. yield A of twenty our Exports fueled capacity shift pandemic lanes seen our Global anticipated air year to European lane. still international expect turn are percent percentage managed APAC sales July. recovery. on further scheduled air eighteen percent optimize have levels. for international BXB for remain freight, yield per network and fiscal ocean demand and levels. BXB on twenty hoc for levels is stock down two. Europe per is to service we Asia access in pound cargo of environment, previously mix. from scarce, and customer export into from recover the by capacity through demand efforts QX, from the pre to and To flights this provide time to eleven to and trans-Pacific XX:XX constrained in for service XX:XX BXC

overall strong Covid in economic to recovery back border as Our XX:XX a seeing volumes to are pre We levels. Europe the recovery recovered inter pre-pandemic Europe cross well with BXB level. have

three European for QX will global Connect significant volumes. In International our first, of a hundred For looking BXC we two six Europe EMEA both XX:XX e-commerce FICP of E-commerce global a expanded cost FICP effective destination eighty Our origin percent further launched competitive proposition. September compelling growth across GDP solution by is accelerated Plus parcel businesses from a FedEx growth eighty with lanes. destinations, And we total to be to critical and Asian transit businesses. lanes. provides in new on value for increasing coverage across

dynamic be to have And We to a pipeline. FICP commercial a it over to world and our market to leading through while bring very incredibly continues confident in our and customers that, new global class very potential summary, we In turn for market, Mike teams growth in yields. it his with XX:XX sales remarks. I'll continue gain robust remain

XX:XX and afternoon, Thank Brie, good you, everyone.

year financial quarter. FY’XX the covered over Our the million Of year by share our in of approximately impacts first dollars four three detail headwinds, will adjusted XX:XX Raj majority the FedEx [Indiscernible] these I dollars business. eight And earnings of challenges these cost, impacted of impacts operational the three was for Ground headwinds. hundred while which the year year quarter impacted negatively over point per seven

cost impact eighty operations, facilities are at expansions sixteen online facilities year five capacity on XX:XX which related utilization peak layover, results our from cost hundred said, lower to estimated as million to quarter growth a a taxes. and [Indiscernible] incremental and lower we and included the and our that critical sixty break included excise on estimate into to the look network rates, restrictions want an on paid [Indiscernible] at bringing for of This the wage the approximately XX:XX crews two to million two inefficiencies ensure automated premiums our services. labor transportation a of Express investments including line dollars of of assets in repositioned rates network XX:XX shortages this team party XX:XX impact rates. network contributed and of These third pay business. party costs first higher for costs meet members usage of higher network quarter. service the costs higher expectations labor of as did impact air impact haul, continuity additional and addition year I due business [Indiscernible] benefit and over XX:XX on which fifty come XX:XX represents the difficult total higher transportation and restrictions. dollars purchased addition, third conditions And aviation beyond. and transportation, ago, sixty in results the of [incentives] our at million Covid include labor than to wages new higher Beyond throughout impact thirty inefficiencies. to in Express, dollars included hundred five and in And (ph) the time first million hundred dollars the In pre-tax That a a Ground our following own the to shortages. estimate the prior persisted a limitations address the reduction that labor and staffing impacts, the for dollars rates also headwinds. additional in An healthcare adding million the improving we reminder, results in five recruiting to all for of network, immigration wage supplemental quarter one service we As costs In XX:XX to million

the overview first and variable declined result not the let’s to was With in As during pandemic. an due I air Express of expense turn the the flights results months early discussed. compared the also consolidated to Profitability of higher the Covid impacts XX:XX impacted for challenges network operating to expenses from XX:XX related that fewer quarter. was that the the highlights of surge results headwind segments. At charter spring compensation a last staffing by

are at breaking to for in we results ADV Q. While an and to like detail, quarter I to continued ten the drove reporting percent increased your to average as providing and our our with commercial, of shipment would quarter, Beginning reported result now quality for economy on ground, seventeen a a percent covered Ground our revenue network to and FedEx are Ground impacts statistics average delivery, product included XX:XX As spending. and previously. growth operating first call per attention margin revenue volume. as enhancement home record Turning Brie day to out the daily percent operating twelve for point level three profitable unmatched XX:XX the XX:XX services. and highlighted Freight, our Now growth release package up shipments we let's of eleven XX:XX focus business seven we pivot capital in we've disclosures daily the in additional

spent our quarter, and profitable to IT point growth, capital During the for we we platforms. six digital modernizing one our first continue strategies billion and dollars excellence as in service invest in

less a eight to XX:XX growing seven is varies capital capacity is our internal over investments XX:XX point at all on our which facilities investment And fiscal business of percent percent on second, two the capital only XX:XX rigorous an sixty modernization for at project. weighted set First, of at in As twenty seven forecast which high nature above return but carbon critical aircraft than financial and business. projects. fleet seven more Ground with e-commerce we place increase capital the to investments, the capital invested based not continued existing year hurdle following expansion seventy and a look our in of fifty opportunities a Express process Our our on managing In seven spending rate elements: from capital footprint. year reduce we of return, the for seven has capture in approval new and and key capital remains includes than we average projects capital, dollars anticipated on revenue billion and two and new cost to at part important return strategy of evaluating metric new have

on capital example, XX:XX important and been have an in and to business an would on our XX:XX dollars for flow lower targeting flow in We in twenty the metric in free FY’XX, both than billion fiscal historically dollars Capital growth billion five billion strengthening seven to in focus and replacement We historical For over us future. cash balance adjusted over rate sheet quarter adjusted capital exceeding deliver with the combined managing for FY’XX a to cash allocation returns puts three pace which always twenty hurdle levels. seven continue free two capital. dollars ended investment twenty our point are two. far cash in has and our thoughtful

the During fifty the quarter, to hundred million one we roughly million point of the additional contribution XX:XX this are voluntary our five pension make year. we year. and to dollars one addition, balance plan a shares plan shares nine totaling In dollars million five targeting repurchased for million approximately

We our are guidance fiscal to were which our lower first quarter reflect expectations. than lowering two twenty twenty results, our

expect longer we to than the of year, extend fiscal the June. certain we originally As rest to we factors look in forecast

second the one. we pandemic, to mark fiscal all ranging percent of retirement adjusted our dynamics twenty EPS year approximately percent mark point mark record nineteen with two, spread managing are of the of business given before macro As excluding twenty inherently recovery market economic adjustment strong new and we happy healthcare point cost the share are year second the the guidance, twenty outlook our are challenges growth will we our few environment two I be a quarter level we in five our quarter XX:XX we to outlined productivity not our While including an nineteen providing are persist confident and global the timing The inefficiencies performance next assumptions are increase realignment impacts per cost our that you and several it calendar tax in moving uncertainty benefits of following fiscal adjustments. excise in we key of forward, address to fiscal navigating calendar five team first a integration the five labor know, variants, XX:XX before nine the reduced by one steady in now QX highlight approximately will we twenty market to And industrial the improvement That share strategies of chains, accounting first members the related headwinds expenses, within as in market twenty Consistent forecast labor assume and quarter, second expect expenses twenty reflects said more in dollars taking labor, to do projection earnings us course, a questions. benefit anticipate to for from aviation of XX:XX Express effective one. taxes. driven two outlook. QX add adjustments availability earnings experienced the we be improvement combined disruptions and prior also as with We recovery to that to similar availability. per availability, COVID uneven while to twenty from rate in for persist combination in labor With in half expansion and, rest we activities. of growth with percent and and allow fuel our is are global and the and eighteen growth prior dollars actions continued efficiency, which to four these specific government at allow XX:XX operations estimated turn price expected restrictions, Covid second U.S. global fifty to again over investments to production trade, and Raj two. the headwinds XX:XX plan associated the network term structure. of EPS So, the air seventy shortages remain shape realize forecasting regulations. plan twenty of TNT response our Overall the as the of to in of want to retirement future Our the uncertain your and into to drive a nature these supply year unknowns. and existing us expect assuming in we [Indiscernible] that to While twenty of expectations Ground, global headwinds to quarter, XX:XX higher current existing and point and fifteen in quarter, XX:XX gradual the XX:XX long will we'd tax will respect labor represents

And Wolfe first go to [Operator Instructions] XX:XX we'll Group from Scott Research.

is Your open. line

XX:XX Hey, thanks.

companies reporting capacity growth. improvement in of transportation but other it and guys, every margin me now a labor that So, And earnings and has transport everybody right strikes tight lot pricing power. everyone's inflation, with dealing

of sustainable and are you So, in bigger you to to or earnings, you seeing all more, a think outside my make making think I realizing do transportation and of capacity just impact start do is, more that? improvement changes spending you in adding sort need you significant meaningful more why than guess are returns, else contemplating Thank question anybody margin, you. what

saying we versus all. XX:XX at us Let do me this start by see situation as them that definitely not an

labor In broader is attracting the care workers, markets cannot that disruptions hundred the the reported day noted very schools and and So quarter. safety availability firms situation eight and just course, economy Fortune function companies impacted difficulty the of over of the stay in XX:XX in open. not complex, and chain Covid, of properly every workers our by labor that concerns and past of fact, supply with - the sixty Fed labor sector the very Minneapolis and that childcare percent really issue cannot

are first combined I to shortage approach we culture taking to prepared the we Ground has the competitive in that our our with outlined as confident in are market in this operating positioned the model my and actions to remain So address our people teams flexible and are we a highly it is - model succeed. we very where for confident us an position, I operating remarks. differentiated makes we XX:XX add makes strategy. Let me in just that a have good market network, to value that mean it very have also growing, the our that

And Mike. to will we we labor year the new And as here. said, - long the in confident strategy year availability calendar calendar continue term recover, to the so see are Mike expect the in

considerations Yeah, the Scott, great can't everybody financial in thus in has add, there. and and singular this transportation that. all of ramifications specificity with impacts business that same of there think you I just us just I the kind bucket of the nature We've explained one characterize of how would assume the operationally companies terms

So, look, that. wasn't that We've address of what we first we the anticipated. taken recognize to number fully a actions quarter

to in. we that need the We will of we change actions further the I will pace but identify operating have. absolutely The circumstances the don't sound, here, plans that would say we're to of if absolutely we things as the to would we identify fully about but environment continue the given strategies are revisit pace need think

will I of in Brie So, be to continue growth and characteristics the what highlighted think is the business.

forward. going underpinning the remains that So

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

open. line Your is

these across and you we've being back margins those same profitability six way seven XXX improve hear frustrating is going the definitely they been how growth. say networks. and (ph) peak there the in on come obviously for the guess, that, lots were you decade, perspective I the But thank ask in have way that the get just and definitely in guys is substantial behind bold all And those do have lower but margins everyone do that, you. plans to look we [aren't capital how ensure put they Mike, investing bold review investor of prior the I’m in I taking Express the to way think now to forward card can returns question deliver to pretty follow-up returns from a actually evening Good a my are future? we the prior sustain for seven showing] down, and you and than XX:XX hey Thank question. to actions growth do seen just what past traction, done to like I

So, aircraft in about Brandon, there. me XX:XX Express let investment the you well, first, mentioned

in those. efficient for a and margins capacity here Should and the they're a opportunity the drive you having and we changed case rewind of number XX:XX sixty our seven the remains the year of so Express. there, the unparked a in newer talking lever capacity need and the of economics more fleet. and there MDXX the additional a Obviously, will forward, and If in higher radically things we parking about half midst seven was ago, seven roughly that market aircraft were a the at with triple absolutely and are improved proportion change the going it is fleet reducing flex

so absolutely we're we again, network will a fleet and remains that. – you another term in ongoing long different with So, of the started initiatives What second these continue renewal the with aspect? and that at off was terms winner part looking XX:XX of

very is few is a margins Well, evident, that the you that think in improved. not just years, especially the Mike, your investors last frustrating I growth have of it's thing the lot for

So there's come margins plan doesn't a through. seem improve to to that always

bold taken are that be the improve those the can to future? outcomes what So steps in

improved back let one twenty had in Well, step record results bit. just margins. We me and a little

than we in operating is months lower there. albeit you some ago low at guidance Our digit the if shared discrete at look had you is three end, tax we with what fact items earnings the double

record So, indeed, that focused a improved driving projecting and record of cash margins, year. feel on year we returns are on another flows we're and top

continuing absolutely to that So, again, we trajectory. are committed

XX:XX And Chris from Citi. Wetherbee we'll go next to

open. is line Your

on question. XX:XX run helpful impacting if the were to I quarter. through ask and be nine of of at volume. inflation that a on Hey package those percent the kind thanks for cost Express and to the sort sort the it costs, to were of inflation items package, of look number exclude flat Mike, about it’d getting But looks essentially want about I taking items like I'm the Ground business, the cost

the in the full expect do not of you've inflation that those items could think driving margins individual what's segments when maybe So expand the those volume talked and And about, year? of us segments. do seeing ex that you for at change maybe if I was a to for both wondering help high level growth you such cost we're of the some understand you sort

a at take let me let Well, first. swing that

in just The cost it to clarify talking are broadly, me what's and that as relates inherently that category So about. that the you're to outlook. taking inefficiencies cost our let contributing network inflation increase

terms to mitigate expect wage those that any labor we're the assuming giving of We outlook and change of terms that. current work In we're away. rates and our market you here, in in not

an here, more you just handlers previously, rate at increase. a paying major sort we example is hourly sixteen locations our percent is are illustrative that an north year our to hourly ago, twenty a than rate at the give So Express Ground, package of five percent

reality right the is now. of labor that market So the

you And here, are maybe and to I maybe part of talk I of help so go as what through think actions if - there. we we number as are a taking we year that; also the address highlighted, Brie recognize through

in just adaptations tie the and as plans the that those So efforts, again, year, some with Raj initiatives through of our to the as on number in a and the half XX:XX we announced highlighted of more year. execute to other bringing second largely ongoing will like efficiently will I we're said, of making here, yesterday off operations more we actions some technology second efficient the our then as go aspects some we're have we tailwinds The impact combined pricing half. operating well the

contribution. other a (ph) program frontline there last the with the was be severe two recall, XX:XX half of third bonus situation in of tailwind [yield] our and may of comp year, the As items the And you we in had variable the then recognition weather quarter will the then second year.

So context put trying Raj, you you… all there. in to anything for that

to expect of by business. in our of in I we saying just going segments that it just margins half course cap improve that second all the

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

line is open. Your

on the of items [Indiscernible] being that you. second XX:XX because to comment follow-up than the again, want half do Thank the better some I last point to the Indiscernible].

year So you expect you have you The imply this in which approximately [Indiscernible] significantly I'm just than the reason question necessarily going to asking doesn’t get the to being full guidance confidence second that better be sense your first is how half by [Indiscernible]?. I’m half. the [Indiscernible] because of

the some but XX:XX we non-operational some in of Ravi, it guess way there items there, I I'd were you up second say was fully… if broke to turn around these half, reference maybe a I being the and other

top approximately the (ph) magnitude first again, the labor materially cost does so yield seem some why better quarter of wondering the for going a you to the rest bit not half could year half do nature like you is the think of more kind I feel Sorry detail first can if the to items be accelerate full going the almost seem are us to the you than try this kind stop the variable comp of, are you to non-operational that [Indiscernible], the I again, get accelerate, continue if question because is you into volumes miss, second really cut of the because little basically you could I [Indiscernible] contribution, the those quantified, asking by and reason if line of imply etcetera, guidance your which I’m expecting was [expense] one-time year?

it. taking sitting amidst Well, we're mitigate circumstances, to we're the on hands not our actions

characterize wouldn't result I outcome of singularly it just at of changing as a as that. the So, and QX looking

number realize we you year. exactly around and would and in might managing labor at QX say, I'll on that the taking through address your volume a the second we're the matters number of Brie so question let half it later for will actions XX:XX we and outlined. the absolute make as we we're be fronts go availability as looked aggressively challenges, aspect extraordinary So the every other thus it way there. I I our absent if results turn guess,

bullish add thing still take and QX comp a guess The both XX:XX the we're hardest fiscal ability I over perspective. volume is pretty growth on year internationally. growth domestically our and from to Yes. year the our to of the is only share year

we comment earlier about earlier there sure say of kind had flat think for volumes. I So to a was

tremendous right put what to was a growth we peak look and peak. We're as record in now have network that high the on we to year. have last volumes perspective We going at growth within see towards

So, great and on Europe in a half what incredible going head It’s and Air we complement shared big we've other performance more increase the us John’s which integration [Indiscernible] finalize of team and that's confident are we'll as a reminder, (ph) a the a going obviously back help some and Karen and couple [have] technology our half. productive, Mike volumes is profitability. pretty to European half, driver then some to going on in market January, of into improve as and into coming some so the again, back in lot of peak as to things, the it the has we got the they Reddington work there work Network, in of got be back

the we confident the of So, are back half pretty year. in

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

open. line Your is

XX:XX thanks. Hi,

network just just these the deceleration the percent. seeing about about that improve down over was what good or I for were we're maybe international, on deceleration strength Raj, there so what down ten of of of in thirteen year a mentioning release little talk you're percent in but labor that volume a year some you of side So, and numbers and where kind comment domestic part seeing e-commerce Is ground print, topline market the of yet hearing peak, talking about anticipating maybe as some indicate we're volumes kind just from some this had still the to you the think of a with the more. in talk the the

seeing going segment the No, I'll XX:XX said. of even because very add only then you And for -- even we and turn to are growing for the volume we’re top volume strong. flat are seeing from tough year-over-year economy over product is start Brie. to growing and that, of we in on we broke strongly is International is comp a just first very strong time. on just actually reason commercial HD it very ground a our out still the what Brie Sure. and The absolutely volume volume to I'll a the

businesses, strong. and we’re IP not -- business, place very is restructuring export only going our the – over our but business, So, our business international IE our domestic very,

the continue we of marketplace, gain providing are strong around services very so So to be world, because that share to we differentiation demand no, market continues and for our in Brie? the the the

clearly of XX:XX we that we volume clear guess in one thing Yes, it now. the wasn't perspective opening are constraining beyond. my get pretty Raj demand a outlined maybe from remarks that it is think kind I should add I as right I

everything are we that, As Mike talked it. constrained growth with labor, I so you the service. at about of the the right constraining referenced and we place it's we've have in we've and the it's And highest where saw tell FedEx and can as we strong the will that can segments, growth. growth least product, I those our are sure It's product, done we you earlier. doing you and profitable Economy that numbers made to small profitable see Raj And medium that not constrain right strike commercial, that to balance commercial

shows my are I to we share, of are because having opportunity and say the one, in then been market So, feel two, share we for FedEx; number that, doing we've issues, so would very a constrain we in gaining manner. we're labor disciplined report last secular confident growth the

XX:XX Wadewitz And from next we'll go to Tom UBS.

Your line is open.

half. pretty on back go of it really, Wanted seems you. way, that the guide Yes, I to availability assumption to big improving like in second labor a I XX:XX labor. your in thank mean, hinges

get visibility So, maybe I I to component two you guess that you your within just gets you give -- the guess that you people, that's know (ph) elements swords] [staff don't better. seventy thousand improvement have it feel of going seem I thousand that. would a what is And that could could and you worse fifty have Do go to if if peak, then you into like number hire, much confidence you then that ahead before peak, happen? would that to people problem it to seen like can't that have

you. peak So, and being okay on Thank labor as visibility I during your guess well?

our you, is thousand, well and Yes, on Tom. ninety we XX:XX are Thank way number the here.

we a we in weeks, that we have the two pockets seen changes little of quarter, and last bit is so this QX, labor we seen -- we're encouragement, we so a positive in good first be of the have Now, if that but hadn't shape. some of terms assumptions hopefully systemic in uses staff and opportunity and up will here availability, in peak, then issue, making for yes,

early and So, better going indication case. we – QX, of than we’re here making we’re but in that making than indication not assuming QX, are the better QX, the that indeed just and dramatic be QX terms is assumptions QX very is to that's early

want know, I Mike So, anything to to you if add don't that.

The the assume we that is, than impact the is No, the Raj that, to availability. baked what as we're impact XX:XX that it what two pieces. nothing and in is from is rate the and that mitigate labor just to reiterate, outlook. different assuming wage into part does I can outlined is broke market the Again,

XX:XX next JP Brian And Morgan. go we'll Ossenbeck to from

open. is line Your

thanks for taking Hi, question. the XX:XX

place; some going get to there's about for We’ve to pricing. the talked in trends is Obviously, GRI you the briefly. in about mentioned availability saw now think the remarks, surcharges Just current Brie shippers got prepared some you issue I fuel wanted people, we in up. your that capacity But largest rates. new at ask

on ahead costs, So, you. you to market some just two maybe factors, can then perspective? generally the feel that a larger what the about these clarify volume surges shippers capture? getting from the do talk can comments about are maybe those the Thank you -- and instil price on and you if in You of

XX:XX incremental elements in well the which capacity, good has be one when strategy, of To really key the United as States our about quality revenue our we're talking clear Thanks of as question. application in intercontinental. here Brian,

hoc Asia and As launched outbound to us sell plan ad I improve we scheduled frankly that it, new the six but also to transition to talked allows quite reliability, that and we about predict talked primarily to was us that allows an service about it differently. flights from and perspective, from

on measuring was customers of and are of current we lot rates, at spot bringing sure rates, we versus kind are into As those we that a flights we of previously those in kind are making current that sold catch rates. up

that customer prior of those expand as incremental balance months, business, them our give at eighteen intercontinental right really capacity, terms, contractual with need to the XX:XX we the it last that to So, well capacity so balance. that we're a But to “X” capacity, that give comes rate, give the on use availability market the trying contractual existing if had increase as we've really incremental rate. a there. honour an right customers, we So, customers lift predictability we to them strike and strike our at higher as our terms current they as, trying

a I intercontinental to. side, does in it peak perspective. that's referring course the what predominantly have It's from So application was of

As customers and answer at help year we brought have question. that them new we surcharges they customers, surging they so peak obviously those our this your get need, look I -- they a the on capacity hope helps peak. can successful

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

Your line is open.

Hi. Yeah, XX:XX

and last delivery, and out, the that limiting on you talk forward Just as outpacing the would lines three everything, home mentioned the the roughly on the capacity you little of bit positive the with trend the broken sort you’ve can business? ground, new similar a pieces piece you keep but still constraining maybe of going commercial expect buckets about to

XX:XX question. Great

and that strong that's low, about, also as tracking going drive our all-time States here fiscal this commercial year, Europe. an economic of business. as inventory in for going at we of course, intercontinental have indicators year in a talked So, is the that all very And we're are levels saying to we're well United as the

from given FedEx will So, see strong for year's strong growth. perspective. delivery that delivery very, do I growth the here think Ground expecting commercial, for you are moderate home last growth very know you of a we we will lapping home see, a

we've [sort a move is system So, growth, quarter which and are FedEx to I I see economy home see good due you percent cost. this Ground got decline. going continue. economy through some different feature saw market, to really trend new year-over-year thirty day] to (ph), and to us pace an called will at technology perspective the particular allow you think you're a from continue coming and think I some that going lower really and working, to delivery do the John new to not great the

see home think will balance by delivery, the better I followed this directionally economy So, about of but to you'll grow followed home as fiscal by a us delivery think the year. commercial find economy we fastest

next And Bernstein. to Vernon XX:XX we'll from go David

open. is line Your

spectrum. for on Brie, XX:XX just some and you afternoon. Hey, your the will up that a in expectation out where of pricing at the kind following sort be Is overall past market at years. as period growth, service end good rate add outlook, the there that of do of point from above-market competitors you to kind other little grow operation maybe volatility of the next an the ten numbers participate get growth bit I – you than growth at once think percent a of intend lower out residential business that some can you couple put around or market ground capacity the the lower

favourite XX:XX yes. That's question, my

Our intent, in proposition value we have the best market. the

about coverage We our the best have feel good transit seven-day in really value proposition. and market. the We

demand, the earlier, we we're environment. service because As I to labor right actually now are controlling in trying balance mentioned current

better So time States. that value We've here market got in to growth lean is the a I in intent. of The is to growing. can't proposition. think a great our United absolutely

And KeyBanc take Fowler Markets. Capital our from Todd we'll XX:XX next from question

open. is line Your

from I from the do specific and think Mike, perspective, guidance, to street too volatility kind the quarter be issue. Thanks, great. a thoughts Hi, being kind quarterly XX:XX about evening. can an good understand of not around quarter but of I

are the or then magnitude from Thanks. we you're from is dollars in be sequentially bit quarter. to standpoint? little expecting income some about quarter, Is similar seasonal want year-over-year think So, first million going similar just I this that headwinds? quarter think we make Are of second eight a sure, hundred the seeing into cadence second as just to should the there other move when a And the a secondly, second you that quarter a year? things that flat down we operating

Yes, take across impacting including we're were, that outline I rely are upon similar that think Sure, headwinds changes of a but Yes, have pause you kind I disruptions, terms we a assuming fluid characterization Todd. would of hundred navigating the more that in they chain fair we're way, the when market said with XX:XX and best what degree million, pandemic you. our I along that’s the there factors can, supply the that's many is than look other seasonality say the eight to of board. can't the would because typical but to as and you will we're very trying see, but the dynamics to those much confident why we just we that be shared

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

open. is line Your

that XX:XX question. I to just on wanted last follow-up

high BXC you’re over a that get do be XQ year just same I to peak So, see margin just to XQ begin a notable year fiscal because obviously just margins the understanding up I density low obviously so XQ. think down to want cadence? you typically year? so this is margins pretty that, understand, trying mix, Is season, step mean and pretty can entering pressure, level, pressure, in to ground you Thanks. ground with, of as higher

expect So profit to be margin up I'm forecast. was We're just stick we Amit, that the segments. What not we all with a in outlined operating to going giving transportation it. XX:XX

of the now. So, forecast seasonality I'm market into a right value level And to don't margin to think a not specific given again, to get by going trying precision of at kind quarter. parse the we is that the added of it's get dynamics into giving

Cowen. And Becker next we'll to Helane go from

open. Your is line

much, and Hi, you time. XX:XX Thanks thank operator. very everybody the for

and So, know we've of you employed thirty area, have doing work actually the guys there. a been in thousand you as about lot people China

think work difficult it's more there. I to increasingly getting

versus how sorts just the about where to term regional moving to or back more can you like thinking you. being like Philippines? So, about capacity in you're you that offshore longer have talk Thank market places Japan

that for have actually Thank China. XX:XX Helane We in you employees question. twelve thousand

and we proposition business our since market. to this and to there. important customers there business As serving China, extremely have our China in value in We you value are in in continuing four, we we our have eighty know, been committed been improve nineteen

Our Guangzhou just strong, growth our market our smoothly. hub is operations is going and the in in very in

opened Beijing. from just operations up also We new air

remains us, a very important China So, for to market we and very are committed it.

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

Your open. is line

around to guess the sort CAPEX just and guys my of additional all, much for for the targets Thank question. and you talked XX:XX for sort returns about margin. and go Mike this double-digit to the free thank you think you sort about cash you return the guess have back discussion I longer-term Okay, of I consolidated comments great. of flow. But taking when so for always business, operating

set as come a to really square close percentage things. of targets sixteen. spending revenue still when the XX:XX You weeks ago. it margin you Just capital makes the since talk fiscal several long-term haven't sense perspective? us for plans year targets from the it and two it the Can long-term We achieving help raised a CAPEX those proxy to your isn't raise you've business about why

that's are having I vested of lot people justifying. that a think issue trouble a

Jack, so with of and we Right. Board, which the context the aspects analyses. of what as remain what ago. say, the to number XX:XX that ROIC asked up obviously around mentioned so a many but think you be on but are your it, we methods how of percent ROIC But to So, just this various revisiting itself, well I our since around ROIC, WACC above the practitioners there. three the some I that of about put when partly I you the our I a behalf when the speak does months give two, will our am as WACC. expand LTI it maybe to I said topic, ROIC, I'll variability is use, comes measurements, about calculate different you in going and to there absolute tends percent nine me bit consistent range, see can approaches First, will the we to you brought compare the seven of our say the discussion expand earlier in let plan, context Well, little we're We're about of on remarks that I comparative we regardless XX:XX about look, our in made but which not referencing that

mentioned So, all earnings expansion amidst record investment again, the the life-saving expectations, we delivering customer before. changes around and the chains, some the I supply accelerate had in radical aircraft And opportunities so twenty one of we’ve fiscal unprecedented global vaccines the in indeed talked did and and purposefully course pandemic replacement of capacity about we for that, world.

on is FY specifically capital June did I was seven eight twenty opportunities, twenty lowest and ten as these Fiscal So, in our that below four plan the LTI for intensity. account target the historical that call, say one percent, years. twenty was but to was percent the to two

continue no I talked So, again, was one single ROIC on different And there. because efficiently, in there, and think question We probably higher your we're how it than there's generate returns there, drawing smaller making we ago. hub, a can board and units the highlight differently, years assets utilizing a and at ground there I will lot absolutely if did hubs about nine our eight, ground but more about got the considerations of capacity. other investment the XX:XX margin we're there’s would focus address vesting also earlier a levels that to we on returns, and

again, absolutely how we factors look So, that into at things. these

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

Your line is open.

you eases some Hi try digit environment, things doing there, once know I retain to expanding you on share are limited you but what good maybe you unique Can internationally, importantly low-single at to think you're share, to you that of you're doing had certainly point? how evening. share focused capturing mentioned are more talk Brie, capacity. today, capacity this

Great question.

about So, is opportunity our of a we when growth Europe. our couple number think international business, one, things; largest

Europe and our an States. Europe. the comprehensive the share, complete has proposition, foremost, very we TNT, when very XX, There's business. XX:XX I there's grow now we international gain EU year, in We the unique to the late value doing bought about about business are intercontinental the very the proposition intra- which and to From with access ninety well momentum So, United a fiscal critical, and first and pleased when got is value Europe to we're percent we have physical We States. but fastest the there. what because expanded lines have it's intra-Europe services our we're between freight think going to cross-border of it integration and businesses last three overnight network with perspective, obviously United of parcel think and the

US. sell really very intercontinental of mile And times are as ground product, the from we was allows the delivery the customers, the to It's Europe United transit well the BXB as more FIC competitive Europe So, It's And lot and domestic both a is our different features great within thirdly, quick intra-Europe Europe as underpenetrated last features the I to talked like we mile, value very to so it or have leading last us commercial think proposition a about lower about, we, absolutely service e-commerce because launched when which for the to on product. network. the well then Europe, I serve as have got a sell States. the it has costs as intercontinental. in bundle from to

that's from perspective. between lane, and primary in a we great our also say similar and So Europe Europe, I are got underpenetrated Asia will metrics. focus we've momentum that

We Europe into have from sped our service Asia. up

and my we States, of are think product. clarify. at going neck and the in to be growth a are notes, the just I wanted commercial looked perspective. I to from fiscal year as the back. the In of neck also go about the launching I delivery And helps addition home rest here United XX:XX countries, FICP that is hope with again, FICP e-commerce between Europe product we're obviously into to there, momentum market. So, very underpenetrated really large those a our that, we pleased Asia

I growing than close be are faster the commercial home as delivery, going pretty this darn as So, we at growth to look about talked year. we volume

to Majors Susquehanna. go XX:XX from Bascome And we'll next,

open. Your line is

driven When freight to part expectations relative labor you. XX:XX haven't better intensive drivers, apply freight do in that. Can and business the haul, domestically, plaguing your line to requires particularly look at elsewhere? seem practices a much to of to you a performing I compared had parcel. parcel characterize that bodies be that's lessons Good early learn seems it manual best these the business be that why you least Yes, Thank lot you any LTL and that struggles of think that businesses still can afternoon. or business, at to you labor handling,

XX:XX Bascome, this Mike.

of So, impact, there in that four same for I'll the considerations an fifty of there. within we but labor Raj that number is impact let clarify address just freight there talked to more about broadly, terms

want on I But, the or the highlight dealing have team with can networks as that. different considerations and transportation there I don't in different isn't I'll Scott imply similar different to there. to that also So, characteristics takeaway freight have that early XX:XX mentioned businesses

things freight? the want So, do you talk at Raj, great about

a and very on very FedEx also operational ground very part are challenges US – quality twenty know the day of team, the and proud Well, Having network our shipments a with through our efficiency and that smaller same freight job network that, -- managing circumstances, fantastic an of extremely set or go are of per portfolio. but of we revenue exactly of million have it's these challenges, despite with through ground very, set system. we different team freight leading said of the the a key obviously challenging packages parcel than the domestic dealing is the different much set done we has they and

best we making big doing we the point thing and about single practices your across collaboratively day, now, is right are operate on a goes at and that do companies, sure and mantra definitely So, our FedEx every that we operating that. sharing

team here. again, what very freight So done I'm very, has of proud the

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

open. is line Your

thanks. Hey, XX:XX

was just growth two if in you a this investment to given the struggling pressure dive grow? wage the just Are on it's hundred that issue? or people or for that latter, the triggered, issue an are million And inefficiencies to at million staff little a deeper rate the there, turnover So, two in grow? a leaving but fifty why faster to environment,

question, the of staffing if think understand is fifty million availability two I piece the it I issue it. a So, on

it's For the the two rate. hundred million,

we earlier, fully availability So, the said, expect should as obviously expect. need improvement nonetheless. in not fully see We remains just just are the opportunity overall but mindful plan some proceed should reassess to beginning reiterate of of not the need I And the that, and and to to to we to implementing like we environment. I like pace there, would but said initiatives be the –

just add happen, to to and if there’s implications way much obviously I that then beyond Yes, that’s that would broader FedEx. line XX:XX one were is,

it turn XX:XX And Foster closing back now, for to to Mickey I'd like remarks.

if on Relations participation much. the FedEx have Quarter XX:XX Call. Corporation's Thank Feel Thank call very your Conference free you you First for you team Bye. questions anyone to FedEx. in Earnings about the Investor additional

participation. XX:XX call Thank you And your today. our conclude for it for does

now disconnect. may You