FedEx (FDX) 17 Dec 212022 Q2 Earnings call transcript

Good day, everyone, and welcome to the FedEx Corporation Second Quarter Fiscal Year 2022 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mickey Foster, Vice President of Investor Relations for FedEx. Please go ahead.

Good afternoon, and welcome to FedEx Corporation's second quarter earnings conference call.

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

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

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

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

will Raj Joining Chief VP, Marketing Lenz, are on his and us the COO; on Brie call And views Carere, Executive and Raj Subramaniam, Mike CFO; now, and President share today the Executive Officer. and Vice quarter. President Communications

afternoon, you, Thank Mickey, good everyone. and

who relentlessly successfully peak our to members, those XXX,XXX customers. team robust by begin especially working season our thank extending to frontlines more the me a than another for you Let heartfelt deliver on dedicated are

Cyber of this of are unprecedented Week, seeing the with our packages and up week million outstanding Ground during strong peak. first holiday shipping As shopping in picked of had given volume an official FedEx expected, XXX we levels network season. levels

taken we deliberate handle more strategically support unparalleled our adding steps the large years network influx capacity making packages customers, to to includes have to been of our in Our This ability base. has support enhance customer across this to as small. and growing our network

Ground, June football For year. feet the weeks this major square example, alone, In network, since XX in XXX fields nine equivalent operations brought QX this XX.X just projects, at million peak. of November of to expansion them online of means adding FedEx with before starting our we

in months was that tells in important capacity it experience up ahead. running these peak, time operate add While that they were to us facilities and and the for weeks increasing efficiency will to with a

and As QX on to overcoming we constrained key the call, market staffing shared focus. a been the retention labor challenges has due

paid increase initial QX to led the expectations We perspective, strong XX,XXX frontline including X. results in and members bold invest We FedEx considerable delivered XX,XXX am the off more increased reimbursement. our level continued history. To has having of an actions of highest since call. XXX,XXX exceeded thus frontline than we in I QX put members the this applications for last including take time These staffing appropriate pay to our May income, hire traction premiums, with in This had September. increase in that tuition in actions adjusted and week, exceeded and the we in levels we to applications, shared quarter pleased spoke frontline made week share efficiency. have positions. network Last peak, to operating team we which recruiting XX% team in during

Freight profitable for the estimate have quarter. flex with response I on also $XXX performance Express, of am continue exceeded conditions The delivered outstanding team shortages million, tune original positions changing results at Express to in to board and And quality $XXX with our operating revenue XX.X%. majority income focus first was operating quarter team QX an long-term our ability expectations. to proud and a once cost in the us they We market these for line Second the on quarter, effect network costs where to consistent strong approximately include margin quarter at of sustained our growth. we structure billion Ground $X as profitability. of FedEx results on basis an our with the of of labor again, the million. by the FedEx as-adjusted

computer. strengthening focused proposition all for swap schedule labor hired season are Ground's up are employee-friendly, we app half phone an the an even colleague by employees, flexible year, value are shifts pick or by with after second we on know the of enables We first that retaining when ability from which to half options, concludes. to or we momentum challenges the were further While members in encouraged shifts recently team results the their including look negatively of technology hiring extra peak we the on affected with and convenience convenient the as the excellent have

from All fiscal partially markets half of we year. say the cost subside labor anticipate in this second constrained to pressures to the of

competitors time, to a for and replicate. what capabilities over impossible we are is have ahead time differentiated it's built been focus nearly FedEx. five to And nearly business has and from decades. on during that built Now The our good FedEx that networks

customers This networks during of than years supply their COVID global as last the capabilities been value pandemic. more and never enable and has customers clearly the global we stay two Our to illustrated chains these connected.

And industry, Our to industry be is or strategy this during critical in unique. has this it whether absolutely proven our pandemic, e-commerce. business-to-business delivering is within

total driven lean in future continue and will is environment. There amid robust profitability we value long-term. pricing strategy, and our shareholder our over solid growth the be of a and drive as business dynamic momentum will mid into we immediate, by e-commerce the Our base growth to

unlocking and two, by businesses; digital improved for and we addition, innovation. and levers optimize number profitable in growth, three, increasing number In driving Europe collaboration other have our including: number and to efficiency value results networks one, international;

expanded differently, air manner. our will companies calculated across cost already and delivery Ground existing in better containers, FedEx on and ground FedEx drive networks line-haul this miles operating million more provided has utilize with and benefits, lower we'll cost Our Freight been a assets. smarter, intermodal utilization of have collaboration also traveled which four have dispatched nearly Ground year. FedEx while operating Freight behalf trucks FedEx of XX,XXXx. Said

in the smarter. hubs to providing the network integration equipment including continue in our opportunities work includes planning and we to customers. will and flexibility leverage extends as best supply data right right the We earlier, I volume at platform service to network the common network, And also collaboration assets for look their on focus customers needs. at put chains our comprehensively way all and to package highlighted for the our stations, to make best their This as our

second The lever continuing is to our international improve profitability.

one in large was of will I upon and October, and XXXX. the intercontinental network our business, customers. integration was market We completed track in growth. flexibility Charles completion integration for will for connect XXXX, value in FedEx May of enable will networks. to happy particularly more us European I we our scale After remains the have progress station all our XXXX, this on the Europe into proposition the enhanced needs, the international focus to success to in excellent of Liege operations Brie integration, April Europe, Airport remain in physical full physical flights. will Express ensure on biggest these Gaulle to de markets of was specific complete we European Paris' which and enabling as share response the serve TNT as of thus main build note opportunities. on Our which there April what our interoperability means air and for hub international

improvements. are through integration accelerated capabilities efficiency and digital our to from network we technologies customer value Finally, unlocking ranging data-driven increased of enhanced and digital innovation experience

trailers touches. network for customer and the FedEx package early and estimated for the package significant delivery successful provide learning collaboration, the drive remain example, in and visibility helped high sharing packages responsive execution significantly network services. closing, In These as continues automation our more of third-party enhances demand while advantages. more have customers our Model-driven most most us competitive day the trailer improving technology, for of need a We machine investments, to reducing scan information and And date reasons build load ongoing outlined. manual delivery strategies affording accurate faster to loading scan eliminates industry, these and flexible estimated differentiated in the automation capacity, strategies various to of visibility a confident uses recipients. prioritization. efficient enabling package For

that, let and to global for portfolio drive of turn unparalleled network powered floor of value this reach and by shareholder financial superior, come. positions the strength Brie. to With years sustainable Our returns our FedEx to deliver over me services

our our differentiated has to growth, Good XX% drive second for delivered quarter Constrained consecutive portfolio our support result. ability a demonstrating afternoon, Thank environment. to quality you, as favorable and capacity a Raj. everyone. of continued demand pricing the revenue QX strong revenue

repricing We surcharge capture improvements. a yield ensuring brisk for pace contracts, high a are maintaining and

small large We market as up to inventory our identify capacity to compete. leading opportunities, the scale deploy relied to cannot networks, transit our network Small business a customers same their our from are freeing volume in retailers. They local for national to to working with additional and seven-day our regional week move large network customers. times businesses afford at

fuel in with QX. domestic growth Our was yield X.X%

reminder, increase the for surcharge point expect remains Ground general across peak at positions The price rate us the solidifying and Economy January, we was profitable rate. place FedEx growth. continued the formerly $X, our a Economy will be take In replaced Economy Economy SmartPost. a will a well new And Ground strong Our January, and product. robust Ground surcharge delivery as in the capture for FedEx by industry landscape

that pieces remarkable the growth by to a from reach XXXX, expected the parcel drive of domestic E-commerce XX% XX% XXX market forecasting growth. are U.S. calendar million market a is parcel will year XXXX. We day

of We to addressable will share solutions, have the e-commerce a portfolio to tremendous and that us our very we smartly confident continue value proposition market. developed in enable take e-commerce competitive are

CAGR as customer negotiation. a through have United globally BXB you all in And without U.S. confidently X% States. a The As risk base to at the a grow market will XXXX. domestic such, large also disruptive we here It as know, the and expected can as is customer grow. very well grow we of diversified

are healthcare. give deliveries, control We a their such capabilities digital as will especially provide confidence clarity, to our range visibility experiences verticals in greater of BXB high-value our customers growing over and that

Turning now to international.

is profit lanes outstanding composite the an yield are Our and contributing a recovery while remains and operational XXXX. successful our anticipate Demand growth. response in our calendar pre-pandemic demand Asia per Express which year-to-date. COVID average in X.X%, has is our to growth embargo With contribute new our least demonstrates which, quarter year a to out out of XX% proud pressure package, remain to air I ability downward not fully million. Europe execution quality the profitably and grew will embargo levels strong we and grew international believe surcharges strong environment. puts year-over-year Freight International in QX also double-digit volume continues year-over-year that yield almost recovered capacity full anticipated of for results, and $XX X.X revenue revenue yield. and pricing peak the services and grow uncertain a Export international environment was constrained an volume daily future. am on growth there. of with variants on APAC export our cargo to deferred Priority grew internationally, Asia of through of international had favorable uncertainty in performance, commercial very growth capacity package we XX% and especially to given causing and COVID global Pacific to scarce. export continued economy than course, XXXX recovery, We until that more e-commerce international had International on foreseeable very revenue yield at

We are targeting both share internationally. e-commerce BXB market and cross-border

for shared and most target growth in BXB we of the Europe. and where have out opportunity, across have notably We lanes growth identified

of to network the our into and creating within pre-noon launch will next-day with the our More times and in portfolio capabilities integrated to, customers will of As dramatically enhance European intra-European world. our expanded delivery through Raj shipments customers for for alluded April, access air we have their services. around benefits Europe,

competitive position flexibility portfolio. end-of-day with able or be customers Europe, world option our services very service our a global to the opportunities will pursue. and along road We more and team to giving around service, choice with to mid-day in-bound our offer Europe customers U.S. of intra-Europe us giving an industry-leading These more to while enhancements, sales

approach on the by stages of rebranding road this in are we the presence approximately XX%, and vehicles As facilities. increasing final FedEx the of year, fiscal including Europe we the integration physical brand

e-commerce Plus, the growth Asia intercontinental the more across FedEx effectively and over will decade. of which this compete market half Additionally, next in market. enables launched Europe, States, the the contribute United in approximately parcel Pacific us International Connect growing e-commerce to

the customer to improvements portfolio, digital journey. our focused on across the solutions are addition In very transportation we in our

launched have application in We eight with great our very account countries new opening results.

account We seeing are in openings industry. small which, the FedEx of for improvement double-digit is in business the customers Rewards, in and course, My opting loyalty program only

We for with small FedEx more in Ship new have our This segment the launched ship FedEx. than primary to tool application also is countries. Manager XXX our business

minute get the a out faster they modern, easy-to-use small the door previously. interface, than create business than and With can could label more package the now a a

new in growth very that, confident commercial strategies to we this Manager it I'll our Ship will States remarks. turn United with In yield improvement. for in are for revenue his We launch the over summary, in FedEx And XXXX. and Mike

Thank you, afternoon, good Brie, everyone. and

historically second income quarter by companies numerous Given around season, the peak financial results, year-over-year. pleased operating nature challenges our continued the challenging are we consolidated staffing along quite with of with felt with world, adjusted up XX% the

While year's a as significantly last was from IRS. this issued tax share earnings effective guidance by rate per unchanged favorable the tax higher year's year-over-year, included $X.XX discrete earnings share per benefit adjusted was

highlight our second by first most estimated QX an which experienced additional $XXX year-over-year market further once unpack we the effect estimated million. several the largest $XXX the through second drivers. As To profitability we quarter had will persisted dampened again anticipated, our million bottom costs. our key difficult quarter, I representing results, of headwinds The labor in the on an in quarter line,

higher we rates cost the staffing separate wage members incurred $XXX network higher transportation and into $XXX additional higher third-party estimate resulting in last team wage services. rates. costs and I'll the These reposition purchase and network shortages, higher include shortages. higher did resulting labor paid over time from incentives assets transportation line-haul, to paid the premiums million, from usage estimate quarter, I of inefficiencies costs shortages. and million. by network million two Of was the We labor market and of As increased effect transportation, rates to for address components; labor $XXX included This for in approximately recruiting inefficiencies all rates third-party

international staffing air adjusted million approximately by margin down $X.X on constrained higher in Raj to to addition X.X%. Beyond a effect X.X%, XX% priority are inefficiencies. headwinds; operating driven the to at the income with not remain Express mentioned at Ground the operating outstanding $XX increase effects, at amidst were excise estimated air offset QX year-over-year increased rates due down million growth, operating to performance. and effect operations; quarter results The over significantly reported capacity; service inefficiencies overview on for the taxes where another income increased XXXX. than and improving I in in had labor an million for which and transportation year-over-year, labor XX% year-over-year. segments. adding the lastly, the an the by our COVID volume from in we restrictions billion the and revenue wage quarter XX% income like teams COVID-XX-related to improving market. second waiver network, be, December critical of results was highlights our the $XX more a of and as Express adjusted also of for included very was following operating earlier, $XX reported margin and that our $XX on effects network $X focused with Ground as in results negative and And margin network investments challenges purchase quarter which continued incremental continued XX.X% of income of costs to year-over-year second yields and them million let's affected ground the operating increased With operating margin outlined with and that and higher the higher federal Ground the consolidated ended turn to would billion as Freight an results, the XX, earlier, are operating revenue, million. network related $XX

Our related for U.S. FedEx QX to Pension results point Plan. include details a curtailment this I'll a net mark-to-market TNT charge of termination Pension pretax on Freight the loss to of related non-cash and XX-Q these the $XXX Netherlands charges. filed million afternoon you more Plan to our the Express

in we spending. profitable capital invest Now to for service our as modernizing let's strategies billion to growth, Year-to-date, our continue excellence digital spent $X.X and capital in pivot we platforms.

at quarter pace FYXXXX, far for cash to to billion XXXX over These as adjusted $X fiscal are flows strengthening ended on FYXXXX continue free and revenue. flexibility historical and in capital of exceeding billion and and us forecast cash for puts extensive for flow capital Our our cash XXXX combined, adjusted balanced our less which allocation focus approximately X% provided We our $X.X on billion deliver anticipated sheet. balance in with free $X.X in flow cash $X.X levels. remains than targeting we billion have

authorization. has am to completed of on end repurchase new program have This share driving X.X our value of half the top first to this flexibility, our part we the to confidence year. tremendous repurchases which enter of shareholders. of of commitment million And and the highlights be in this $X we new is underscores Board $XXX program, as the our I pleased that the year, the fiscal billion announce our business for in a result by share approved a As of program into a expect repurchase will billion

$XXX employees, which and to plan, also our make million February. pension contribution million for PBGC in voluntary we our we our mitigates the additional an $XXX funded QX, made and expect status of to a further strengthens contribution During plan fees

benefit As the XX%, strong full-year of $XX.XX raising for adjusted reflect results year our ranging another as the FYXXXX guidance, represents XX% This our our our increase for year second from and financial half results. adjusted with in second outlook quarter year-over-year $XX.XX ASR as from are XXXX to transaction. following the to to EPS a range EPS we to outstanding fiscal improved outlook well expected

expectations, exceeded the While the our fronts, second quarter market. remains including many labor uncertainty across

the pandemic the developments developments persist address vaccine labor progress as inflation Labor to availability We through mitigate to inefficiency as we this. related will in the our and to mandate, are ongoing given our quarter, network and closely consider federal outlook. monitoring headwinds date QX, we and move component continue will to but plans

winter successful the we of not updated frontline gives billion do In the personal in environment from amidst weather, compensation a take summary, during $X variable very In a the dynamic for one-time commitment approximately strategies outlook and remainder our recurrence the that of headwinds notable addition, our fiscal beyond. the historic In in us privilege execution want of a of Carbon ago to severe half year XXXX a expense, second to moment second of initiative. expect I our Yale quarter here. confidence do included closing, timing a bonus and express Capture

our has at signed this not of responsible familiar for he XX end our John financial And these XX-Ks. of years after our John with and Accounting quality of While are long-time and Officer, been integrally retire integrity calls, who month. information. Chief on the with the you will FedEx, many XX-Qs Merino,

to Fred of and thank And before us Q&A, share to the would our team, like to on So words. has Smith, record and I him want Chairman the joined CEO, of move a now leadership service and accomplishment. few his we for behalf

to on Thank the you, good afternoon Mike, and everyone call.

promised As the here I specifically me. Call, Analyst questions any am June on to for answer

QX to covered thousands those our by me but This dedication results, by for year especially and working of our Let Brie the well saying Raj, on your our of customers is keep is time frontlines, thank members. for tirelessly promise start you hundreds work evident to our of today. challenging, have hard and purple Mike team

pass in Merino portion Vice Investor Meeting on our announce pleased XX, me Accounting outstanding John Let Year, for him to XX we thank the for as the be Chief Mickey will FedEx his Mickey? details of hosting the XX last also years. an work President I'm New and these begin call. to Q&A I'll and XXXX Officer back Corporate it will to June Tuesday after Memphis. Wednesday, and now share over

Now please one session, question-and-answer I'd callers can so like remember, accommodate open limited are our question, to everyone. and to we

Brandon from Barclays. we'll Instructions] first question [Operator take from our Oglenski And

Your open. line is

as thanks guess Hey. have I Good taking question. how thanks constraints at looking inflation is much in things see Or been seen the my that result past evening, really your industry, the of steep. chain really joining moving for everyone, we've this call. this get context that in for and going to rate Fred, this and we pretty supply we is the Through year of increase transitory stickiness? again?

Well, this is Raj.

two-fold. answer of me semiconductors today seeing in are is components is of the of lack the like seeing the constraints One The supply we're of we're second port. congestions supply question. that the critical chain because because and Let

know, through the the is that and flowing good you pretty as United traffic a from few out actually States. supply FedEx downstream Now chain miles gets port,

over the from global the also flying top system. the are we high-value course, Of economy and goods delivering through

positioned chain stay for success supply well for the to and expect capacity we be cargo here. time, some is for to The constrained are very time. going We air more constraints some

future, us think add as internationally. size services demand But our for and is also flexibility I massive for strong have be point of and to up manage there cost accordingly to the able me Let scale for the network The to we our that scale this well. foreseeable network the down. is

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

open. Your line is

both kind the your largest I you've that environment much. well. and what the look country, industry just meaningfully years like? carrier the kind concentrate chains ramp look XX of us does USPS thoughts told the in? would competitively supply and competitive seen where, are Fred, like capacity e-commerce the now phase. on What just parcel Thanks Amazon this in love parcel like the the of now of business and of to in last up very do believe from long-term they you part what decade kind they in would as that And

Ravi, this Raj. is

say is e-commerce strongly, pointed market out as numbers her Brie just growing the me very the remarks. in that Let

times, $XX forget that billion, last of statistics talk and some we're growth. are than first We about so the and are years, When the miles. few about growth their to can story, last people is you sometimes most people lacking in know and about see for about so center what thousand the e-commerce that's say talk the mile, don't it, of underneath gets two what that retailers in misleading talk right that grow story the I fiscal and any And that. – ecosystem. the FedEx behind often you we're about see omnichannel not from growth these to missed it. When going they again, And as more our even

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

Your line is open.

and Good the Raj, growth, level structure Europe with decades; you Express, you mentioned, you nearly the just afternoon. with hitting Great. impact obvious set thoughts Ground in particularly the out talked you labor mentioned Mike how impact at Brie that. to talked gets walk through shakes of and easier. expect decelerating now think looking your But Ground, with cost Maybe should lowest growth on sustained just margin it's for the the of margin? subside about some the as integration. us two we on labor, up those TNT e-commerce about, Ground have the that and about as costs

is So Ken, this Mike.

second there as half. a highlight couple think just you me about Let the aspects

from significant availability labor So challenges. the most Ground had the impact

that, has again, this profit quarter. So impacted and margin significantly

around through of you turn move in the the if QX, year, we market somewhat in fiscal particularly As further that that period QX, rest labor time. we'll began recall, mitigation of the of see to

change not lapping the be fully that labor said, the of we'll because will any step that change That persist. projecting we a network think in we're that we rates plus, address is inefficiencies. So will have some

by And Ken, let me saying that add much. to this

more services first have robust. get is investments demand the technology into that The more The the labor second the as as environment most well. half start that very make Firstly, made robust. important us headwinds efficient the the very The second is is investments efficient and for in to point we recede half. we our go pricing and

So to year-over-year, we half, profit and the our in second get and we operating expect margins double-digit. improve

So that I question. guess that answers

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

Your line open. is

you Thank I little traction more margin pretty develops. how get kind color tied to seem performance, to wanted Ground tightly does It in labor labor your Yes. rapidly the market. that you. its like a on get on whether and of

for you guess your labor in increase you assumption that? the sequential out? I in in as have that season I let's you. And So Or stability a visibility per some of is is of cost peak lot have cost point per your that you say, inflation Thank guess like to ongoing? the do kind kind you hour labor? convert hour, assuming are seems it further you And look then to of how also, much the

Tom. you, Thank

had yes, pretty we first in front, going to obviously quarters On we and where much two thought labor actually be. landed was it the the headwinds we

that Now, we highest we seeing, May, in had that what we we in are considerable XX,XXX. of earlier XXX,XXX to in labor the That's our remarks, I are because week, Again, saw on you versus actions put the front, to last context as for applications the just in taking was history. traction FedEx. my mentioned the

we're So see can that here. of a you lot progress making

required on to essentially And are up to can so the think we we labor staffed the for that second we peak, hold and half.

assumptions. I about we want you to that? now these incorporate to projections if talk that add So that know, don't Mike,

pay off to network count thinking you're in peak at when volume perhaps we the as navigate will here, market base further, format to handler we're Tom, just as different well inefficiencies. of managing and in down forward. labor going we're a to the rates optimize any from a assuming No, That's right the order peak coming that's forward. to it in package stabilize Certainly we going surge, And continuing I think that But the otherwise stay, there. reiterate, are December in the about the documented. that because here would not go were level it to reduction

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

is open. line Your

I Great. a we sort of guidance the back to and little half talk bit of in Thanks. of afternoon. about make the main the the particularly understood that Good sure the increase, drivers year. want

you at us into the how think to in look from dynamics some where could have we back the if and parse obviously opportunity cost Express, the of sort year-over-year back think half comps the of see So you relative better new about half, guidance? the maybe out are were but you reflected I if favorable, Ground help that's and easing to more

So at Chris, way. let it this me go

first in three just initiatives, that driving the components year. for So well half as key labor we pricing the covered, second we the of as year second are half the last had the the headwinds aspects of

So as various about levers being initiatives. and pricing thoughtful Brie mentioned, we're the very

effect in the surcharges that that surcharges that November. of first September, we those in in back recall January the goes certain and So GRI – into announced hit

the will as that one ongoing the So month quarter, whole contract year, hit in well so the renewals. we had as only second

the key to are for things So drivers the of you're second center front thinking when keep about and half three those year.

guidance expectations. the far as our above was broader As overall, QX

what on demand, our managed in expenses, the various line executed mentioned, in the to back actually we we September, strongly we but able with and quality impacts revenue particularly Raj We deferred and Pacific. initiatives. were from Asia came in As incremental anticipated labor accommodate right

is share guidance second and the half the the think when ASR the overall the year of So of course, component last count quarter, the impact of about on terms second pieces in of our outlook then, of the the combination for the you of change. annual

hopefully, helps that. So frame that

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

Your line is open.

Okay. physical set European unlocking integrated us question you, of network about Thank Great. talk you once that the here allowing on think with Europe you with the revenue here help your FedEx maybe when overall? market of I TNT and April, or give guess improved will a and how you. But of what for Europe will capture about through in think either TNT in finally revenue share can particularly side, opportunities the fully integration some Raj. for Europe, complete maybe profits a and in you Brie the opportunity help cadence is

we bundle is post best out and answer proposition as short you at have Europe. in value April we the look think the of combined Ground that intercontinental think coming as I if the well intra-Europe Well, of

just So and best a into across the service. Europe value the service from combined great we overnight that with Ground of that Western proposition. U.S., leading will our think We coverage is have that Europe very

As some I investments making digital mentioned, we're significant our in pretty also capabilities.

talked we great we've the about it. FedEx in launched when new So and traction with Europe Ship had we've online, already Manager that

kind got are we think which haven't e-commerce, of April, something we and when about in do. growing post we've has able BXB been great So a for portfolio we been that to

As you actually released, that see we're for details for we the that at you'll intra-Europe. room growth look making

portfolio Europe. domestic we're in up our from So trading international

and about now. sure customer we of good revenue portfolio the the right make we're out really We get making mix right well. quality our business the European really decision highest business as to feel So also

And me addition just portfolio international cost The networks revenue to in intra-European business Brie Europe, ability that's all let opportunities of about. talked as the for in access just add us Brie and and Jack, our out point what that advantage low-cost to one well to mentioned. the for

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

open. is line Your

Thanks Hey. the for question.

forward and levels? seeing relative look term to these share balance longer wait you maybe got think Just and in repurchase set balance the on do the of Memphis, sheet improvement answer the about from until the is but to and to balance you balance we sheet, June, how

is this Mike. Duane, Yes.

emphasize further certainly, of June, but is that authorization opportunity capital I balance explore sheet. the in in the the announcement of just that would where just think, evolution been strengthening we to and logical terms have allocation I a in

paid We June. You recall, the some down past the quarter XXXX. XX% we this fourth repurchased debt in – increased we of dividend

efficiency for well as We growth. the thoughtfully as continue to business in invest

initiative the June. as more we and next is just part way, this capital the the step So overall explore so along can and of further elaborate that's just and allocation, in

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

Your open. line is

Hi. Yes.

margin just more positions seasonal on getting your the hires versus the filled you on bit about right Were would a needed? on the talk sure folks heard the the your just question double- point labor you that a to make Just half of digit? second Ground. want saying clarification, a progress full-time of for Just I that whole little can core you sort I average front,

Yes. and operating double-digit year-over-year profit. The the is improved margins that answer second we half are year-over-year margins to and for that second question, Jordan, improved targeting

other sorry, your of quite I'm in that I So again, say understand terms question, it. didn't

the that actually have positions, was applications the not just of hiring year in employees, have about on of hiring of just of round, need talked for versus made about, the core progress in sort talked that folks wondering you've a that XX,XXX or you what sort people I'm needed the terms you've terms XX,XXX question you the but the you up. that seasonal gone of peak? lot My the

QX. per at more stay problem make the again, our back we members So rate should that And be week these we efficient. make speak, were team with to now even difference. are us the XX,XXX make here have place. hired we labor networks what's that is to our in as was XX,XXX it of since objective where and reloading inefficient. the whole to to going And post sure situations peak we packages the to that's The first And networks our

is Mike. This Jordan. Hey,

in is when in part-time as such of And and Another flexibility helps us terms in binary employees, there's it's availability terms scheduling it. we've and not flexibility, labor navigating of situation this well aspect addressed full-time, scheduling terms that as aggressively where need the of as you engaging the there. that

from next, And JPMorgan. go to we'll Ossenbeck Brian

open. is line Your

Thanks Couple evening. taking Good you, follow-ups for for the question. Mike. of Hey.

mentioned You a hold contractors, for put obviously Court on by was that vaccine mandate the week. federal last

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we to of mindful and evolves. So progress front, be see we'll very how to that on expect that continue

question Research. take Group Scott next we'll Wolfe our And with from

Your open. line is

the for Thanks question. Hey.

want So ask are some as how massive about to of thinking a does I relative for of to picture the corporation big back start it Fred, half tougher margin you we the the then, lap there's the seem yield yield or Raj, comps, to just you And peers. in growth like year? opportunity

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Smith is massive a improvement you can margin here. This about rest the opportunity. Raj, it. There talk is of

is core The business very strong.

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of are As before, said it. I've center on we the growth, market in e-commerce the

volume this of the We has got yield and are ecosystem and opportunities. center both in this

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opportunities significant go Brie, add base. do to our you want to to there's beyond that? So

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And question with our Helane comes next Cowen. Becker from

Your open. line is

everybody. Hi, operator. much, very Thanks

questions. two So

vehicles question just five as regard The term instituted seven use of you aircraft thinking first about the so Congress And a aggressively or of your or share to is, carbon are longer improving years? you're as you maybe footprint and consider next kind second for either And them? the if Mike, fleet electric over to on? through SAF shifting different is and about still how would on how the sustainability purchase thinking with or you're tax that wondering reducing

to that. Helane, Mike. you legislation of there. of related this we as is repurchase, Yes, aware the the are part first take I'll proposed mentioned

in largely transaction December. complete will Our

see the share we'll that, subsequent So out much but that repurchase delivers upfront. have it to to accelerated how just play would of that's

neutrality goals, this the by lot. it, fact we on of thought And announced and carbon-neutral a very and path vehicle operations electrification we here. Helane, our are we this proud that we XXXX, do about that global announced didn't We we across carbon to And casually. our is have key the success a achieved

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on line the vehicles. have sight of over-the-road We

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take We'll Vertical next Instructions] Research our from Jeff Kauffman [Operator Partners. question from

open. Your line is Please ahead. go

I Congress might been a talk for Singapore. with between catalysts you digital occur that there's to popular out affect policy curious, this just about view and the that trade I thank groundbreaking I topic my bit we and little with much, be taking can of you about has know trade a through you on have status was always your And a coming is Fred, beneficial very company with know there? might up? the on agreement you. What the the while you any trade moving Thank question. there China. phone, U.K. legislation was news

allow Well, course, feel our agreement to mistake we and we other for us Republican that did a both away trading that Partnership. partners. Japan, given to the deepen trade with other expressed leadership it. it of the was of go walk to the that to What the And with major administrations Democratic from ties was participants our forward did have States United Trans-Pacific

to we TPP way get feel is join. sign more with like then very relationships the to which best on And China strongly. the broader relationship, So and issue, to obviously, normalize the normalized would trading China a

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that gave this, it enormous in was that's in States or a the And relationship $XX,XXX increase join United harmonious about will politics. last household The the that that disposable the to $XX,XXX. XX trade prevail, an reality forget we United and each keep and disconnect, States So we about I'm the and where the I The decrease. to to the with an end hopeful the is a China. in what at that of benefit, to constructive tax all of of mean years people day the And promoted is income way huge populous China trade TPP have with can. cooler we will relationship best we'll not support. heads try

in So administration does we in am think Particularly the we I to prevail. stay for quite should the hope day, the view eventually I are China, period And States optimistic impossible the of because the will strong we United a free that and want. the goods at traders, we it's all manufacture in think of that. and frankly, engaged end that United States consumers labor shortage,

So was helpful. that hope I

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

open. is line Your

question. Thanks my for taking Yes.

and America. largest the this North in more billion valuable truckload to could do give more for business you having in less own close do EBITDA It credit potentially $X in to you year. focus How You investors asset? that get

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opportunity it that's great the We collaboration as highlighted FedEx Freight proud being of grows role some see Raj strategy. FedEx well key Freight the forward. enterprise of going of results and of are received. very That's as the initiatives. successful It key the we a will part overall Direct product a very have well

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that of strategy important And let FedEx results working. just illustrate me our enterprise part overall strategy, our is at Freight, Freight margins our outstanding reiterate our an and is FedEx that

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

open. line Your is

of Europe. whether where announced some a everyone. through? the remember for you're it the give making you information in us segment if opportunity when us Thanks first sense can and today sharing Hey. TNT, question. you're is the you money love Domestic afternoon, kind the Good margin go that the profitability I for what and help you of level Europe is Can versus of could taking inside what really Raj, understand I'd guys of Europe. acquisition around

that talking when We're the in as It's to have out and just asked doing for Express, you that not the integration have but the good. share. me The there. are the Ground TNT, with Well, we qualitatively. very strong very you rationale sound for, Europe, Europe, going remains business. continental, for we're In of that intra-European let we Intra-European The acquisition. we business the break didn't in we minimal pretty we are international. was it the best player numbers as in address portfolio about out made it

this the value proposition being on very to business, together stay the only part that portfolio on portfolio and international international, also a road. customer Now we piece successful will a not of disciplined of especially now have it and but all domestic perspective, cost from goods it the moving we from make economy

this sure as announced I is that program Europe. So the that that answered track in as and calendar to are we year – possible on that efficient the we earlier make restructuring hope but feel also, we question,

Very on. So April a lot things brings. excited of about what going XXXX

the this upon fiscal David, here in all the sets end to going when visit we foundation It's that reiterate opportunity come detail Mike. in you physical just Yes. expand integration at of to June. the important us completing really it's enable that further can certainly year and forward, this

Bruce we'll from next, go And Chan to Stifel.

line Your is open.

right give capacity. Maybe now another terminal adding you network Maybe a whether there and Thanks, in plan you. facility the Thank terms could several are you've some Hey. ground LTL, network you expansion grow the then operator, you LTL side and of meaningful for but just bit freight that one are evening, good everyone. just as on got spoken the we've here, because us well? peers utilization of to where a sense about

all the watchwords as disciplined is our are and the manage would and business. say we very utilization continues I revenue demand business The how – revenue that strong, so The we one we but efficiency there LTL quality in segment, in strong. this we are our is number for share are side, that

we will and very remains add we revenue strong, capacity. Our judicious be quality in how

is quality with you continue line, through ADS assets. in enhance revenue Yes. bottom we the and do the our and the initiatives technology this The incorporate business there LTL to grew exactly and our efficiency Mike. to into came focus of about X% ask Bruce, what the quarter. in utilization

with our Capital comes Todd Markets. And from KeyBanc question last Fowler

is line open. Your

and good everyone. evening, Thanks Great.

kind revenue it about sounds high-single low of getting up? growth do been the of Just margin do efficiencies? moving Thanks. how double-digit the move beyond incremental lot we a level the Is segment, couple to Obviously, in? you've longer-term the but the path need to some half in close kind years? move how Is margins out of now range the but do there? you on how get to got of range that something to the into normalized there's that Ground about like margins. of It been stabilization year, you've price we margin as past we think you the the that beyond of margin some And of to back think

will So a We we is facilities Todd, at at terms the efficient but this of we about there, Those to the as is new the facilities relates in initiatives – continue Mike. talked opened. to I know labor as they piece. one threw lot it aren't build you outset.

also – different opened are We we seeing to We're assets, utilize last that those highlighted. that Raj making from the exploring fully those we year. elements ways are even technology that

more very higher, margins the so launching we're and components there, and be of come other will aspects even traction. good getting and gain right together to number a about be the there's driving that So profitability will these past Ground now to there this optimistic for of labor a integral headwind really and point trajectory

over questions back in And we have turn it remarks. queue. management I'll the no closing further to for

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

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

disconnect. You may now