FedEx (FDX) 18 Mar 222022 Q3 Earnings call transcript

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

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

release, at and fedex.com. earnings on book quarter website our third Form stat XX-Q are The X 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 our 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 everybody. and

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in Belarus. Ukraine, suspended Russia have and We all services

in relief to Additionally, we have million provided and Ukraine, more aid. helping $X.X than to humanitarian we are move

December most Turning December the strategies another was peak our in as higher Execution for season. outstanding of resulted XXXX delivered quarter income QX. FedEx FedEx our profitable history. substantially operating in team yet to

steps our to making the network enhance and support to and was of in taken influx handle large ability packages years unparalleled small. the customers Our deliberate as we've of

handled seasons we have our and peak our Having We changed e-commerce said moving for set as volume laser peak forward. new margins. a increased focused on precedent that, performance during are improving fundamentally we

You'll this hear X peak, experienced more alone, over us disruptions. the in specifically successful caused shortages, Day. about crew of Omicron. ways: business In due with affected our our we at January to and today upcoming by of talk the more the absentee staffing new Omicron brought rate then new first, Even significant our year particularly mostly driven execution This challenges, in air was flight operations. our which XX%, Investor

staffing Omicron-driven of European domestic factors volume the of shortages, in experienced $XXX Omicron-driven effect volume Both customers especially softer-than-expected levels, in for resulted services, markets. which our in especially and results U.S. was reduced million. January. our our QX Second, approximately demand in those estimate softness We

adjusted it from these also operating FedEx Express income have levels. January was it temporary we strong significant, of Even and with rebound delivered seen While year-over-year. challenges, growth XX% was volume

with about operating nearly third in the to countless more call and Don revenue as our quarter year-over-year, focus FedEx driven Regional that once retire will business again delivered contributions We'll Express current strong his Express, have FedEx of named Vice Richard to by later results income a FedEx CEO and this years of and Don team, during Freight of Smith, say after President President on of tripling announced Americas and service, Speaking President of successor. the a June. much continued distinguished we Express, quality. Support Global nearly year Colleran, XX Executive at

We labor now what in availability impact quarter, QX substantial estimate primarily continue lower Ground. $XXX QX post environment million than labor rates. is the competitive costs saw which and FedEx in labor the to challenged the of seen at in we peak. Operating Ground have improvement we total significantly in third by to be approximately increased Turning manifesting as

the Omicron we labor adjustments our have levels volume that than inefficiencies. environment, previously the With Staffing in in unwound normal customer we I'm labor improvement operating necessary due had in surge pleased softer and at cost the were provide stabilized to Despite labor that levels but acceleration stabilization rapid have share is network service demand. and to QX successfully part headwind, were network levels. in in to forecasted, slowing the costs

lower will and previous our digits. expect reach be As second Ground we expectations double half not our such, than margins

proposition. Over foundation the strong and customers serve an BXB and years, FedEx a value with unmatched Ground to has small medium built

result, As grown portfolio built that strong segments of customer than and a in a and meet investing of market and diversified priorities X with our differentiated positioned period then the future. remain we a included share base. embarked market FedEx in have network the e-commerce to for they in these squarely ago, a This growing upon foundation on we And more market this strategy a strategically the center demand. years fast-growing

be We December And financial by maximizing improving saw optimization our to assets, our investments and here and strategy of facilitate utilization are competitor capital will we in results generate our to what our and our than performance note of different existing this has that pursued. forward, margins. a base that for network our physical business moving prior By the surge further profit technologies potential to making operating those on facilitate primary existing in and enhanced financial position me is of in current growth, staffing. improved leveraging Omicron. this capacity prior building Let

to and FedEx close share horizon to as on on permit fiscal continue 'XX, margin a moment what's prepare the year focus for shareholder we me As to we return. expansion

collaboration to return levers one, on increasing serve and and discussed, through two, optimize performance just which profitable other in at have and enhance unlocking to results networks, Europe; In cost number enhance efficiency innovation. value addition driving our the capital; growth, three, that include: Ground to to new number our digital opportunity we for I number improved lower

quality environment management. Of course, strong this of we'll do in revenue an

to Paris markets serve large international for the enabling intercontinental our the and thus profit as particularly the growth. remains opportunity. TNT we enable of Europe, big will connect to remains airport for Express both have interoperability and integration on track road. a business, the end and in into full CDG will European specific network of physical month integration International market response main all networks, flights. focus to flexibility hub operations FedEx these Our on European physical in complete Liege and of on scale needs, the to us the air Air ensure the

companies expanded networks and more across utilize and air operating will Our calculated manner. our ground smarter collaboration in a

dispatched behalf operating have while FedEx FedEx example, have For containers, more Freight fiscal year. at to than We'll the comprehensively network of network look to Ground X this times. million has serve. the in our put the to been Ground FedEx than XX,XXX and right traveled Freight right intermodal also continue assets which already provided all trucks miles our cost on and more with right FedEx package

value unlocking through are we innovation. digital Additionally,

planned will increased capacity. managers speak. facilities key do to data-driven operations the in mile. linehaul will sortation sortation in FedEx will be we and of operations, Our unlocking technology better operational well fired and balance hundreds efficiencies, as drive that our in thereby technologies last at Ground as as accelerated It enabling dock Enhanced integration increase of productivity upstream

technology and a will during and million And technology the sort packages We're will on as out when Cyber modernizing network. every constrained For staffing staffing our employee on that economy combined sort. well when technology the and where handler One Ground dock rolled helped productivity. it out example recently enable target as strategically example, spend the recruiting of package help this sorts. cost to for is facility levels training ensure systems, and the scheduling significantly with and a productivity every across that Ground Week, retention, keep improve operations of also will such the reduce necessary. of planning X.X dock right us This every focus turnover maximizes

providers enable shareholder over continue value that drive to will the our in helped networks, improve flexible strategy responsive we mile, build In These to investments team to margins. last returns we enhance years improve already implemented the in efficiency. network business' technology decisions the the to financial real-time most to have their and technology make ongoing closing, With and and and and right optimization have turn deliver for For the the that, it automation in daily enable us place me industry upon come. service FedEx as to we let Brie.

pressure X. outlook including towards Thank our lowered year Global X.X% XXXX, demand demand inventory we outlook GDP expected market, everyone. down year States. X.X% supply the to XXXX, around U.S. have afternoon, energy tight current you, our is outlook. prices Several tragic calendar pandemic, and disruptions, high for week, chain in globally now the Raj. GDP macroeconomic inflationary increase labor a uncertainty X.X%, from Good forces, the and dampened economic Ukraine, Last and in United revised conflict the while release be of year growth GDP is manufacturing and XXXX, driven X.X% growth services the calendar with and for in consumer be in X% to pent-up by XXXX. in tilting and previously and trade. X.X% expected restocking investment rebuilding. it inventory services spending will calendar year global support calendar is supported by BXB will Growth be

we environment, to update fluidity tremendous outlook. of the will Given our macroeconomic continue the

for adjust as to to today, dynamic required, increase despite around Freight. environment prices we world, a fuel margin the ready Our the April surcharge X increasing operate. teams drive Ground plans, in announced fuel With are and improvement which effective Express, FedEx we

on the years. growth outlook digits the The in mid- high continue that States will to strong our the details parcel X will the rate fedex.com. found e-commerce can not growth. change economic believe confidence to single We market be Additional e-commerce X for to change be in drive United next in does

and differentiated to segments, e-commerce, in We will and small our all our pricing value build to including customers achieve BXB customer continue our medium business. market-leading commercial propositions

of know peak revenue yield In delivering revenue. States, yield $XXX strong month opportunity Freight, to quality was on to improvement of XX% our with grew a pleased improvement than We growth FedEx close the behind December, million we FedEx strategy results our more X% for yield and great on FedEx Express the in quarter, executed expansion. third flow-through very Ground In in QX and with increase the in at the We our XX%. of X% revenue the have are surcharge revenue peak year-over-year double-digit improvement. package year-over-year, with pricing United strategy margin

predominantly growth profitable quarter. this Freight parcel drove customers. revenue in outstanding both and Ground quality on The and network came and focus volumes Softness from on Omicron the FedEx share our for economy effects of FedEx on results constraining our

year-over-year, the revenue in increased driven revenue per increase For shipment. quarter, XX% a XX% by

e-commerce an as Additionally, FedEx to momentum Freight for items continues Direct heavy growth in bulky phenomenal year-over-year. solution QX great gain with

until Trans-Pacific. are expected international passenger lanes our businesses trade a recover dynamic fully point, levels this to a even navigating on to XXXX in valet reality. airlines airline and is At Capacity strong continue environment. to international is favorable expected of recover later on lanes. Asia largest pricing faster resulting is pre-COVID global capacity than Our continued out Passenger a constraints environment. to across Trans-Atlantic be capacity Scarce or not demand capacity

in With X air the of European road network Europe. this network and have our air the and completion of network month, of integrated end at X we out

else contains the one and in combined a has. broadest next-day parcel network, of road and coverage portfolio European U.S. services the market the freight that international offering Our no best

delivery this of the In offer Europe, later within pickup new result Europe. times, now we be connected while integration, locations. services of coverage. first we countries be in will delivery countries and Seven the earlier introduced on will countries, time to a will basis more XX more service to be transit next-day customers have As to the several expanding a next-day new will be improved rest our able

will portfolio the profitability, to European revenue share. improve gain expanded drive leverage We growth market and international

the greater by new through and machine estimated in DataWorks. recipient customer learning calls delivery accuracy, to In tracking enhance digital date on enhanced January, experience, made model tracking European service. all based experience well. reduce for FedEx our This addition delivers or to our and our strides In delayed and improves will channels. improvements we an artificial value the updates early developed shipper as intelligence significant service it to both This shipments solutions proposition, advanced have including we the

and been continue shipping We that, medium January, profitable Manager rolled new our customer to deliver remain primary in our remarks. States introducing take In small believe the FedEx our summary, In Ship more modernized FedEx we to than XXX value now about for Ship and shipping we'll the enable on a market-leading which digital and it to FedEx is for segment. application Manager, online customers began to in it Additionally, has turn in very beyond, portfolio application, market-leading I'll optimistic segment. QX is and countries. share out Canada. we continue proposition. with will his this our market Mike And over to United

and year challenges cover. Thank in the rapid influencing on operations quarter year-over-year basis. was and the of good a last history, afternoon, third an adjusted company the results up XX% third year significantly you, I After income are influenced adjusted of factors our spread most These during in strong both by to of resulting subsided profitable on Brie, its and will $X.X number variant January February, everyone. that environment. quarter with third a this macro There for operating effect billion, the quarter start Omicron our negative and the December

Raj explained I the context for on our financial operations, effects further give implications. will As the

once although a First, $XXX at an labor market primarily conditions, was million Ground. much effect our had results significant experienced estimated which on again improved, year-over-year, at

third by and customer Omicron capacity, lower at operating demand it for an resulting purchase implications constrained quarter rates variant income Labor disruptions reduced operations, higher in both pressured The compared influenced our the the $XXX quarter, a of predominantly were the factor network third due the in year. availability-driven quarter significantly less in was million, wages. and inefficiencies Express, and network volumes from third and earlier to to For primarily revenue. that surge transportation estimated as

income X.X%. of results our $XXX a highlights had turn With onetime to overview to reported consolidated the approximately transportation an impactful less that Express The for netted of segments. third operating $XXX revenue for and and million, in year of weather approximately operating hourly $XX favorable quarter Ground year-over-year, compensation year-over-year increase third including at million the of variable comparisons the down million. that last each bonus quarter, significantly the XX% I'll with margin winter

was an wage labor While predominantly still effect significant estimated constrained from the pressures markets transportation purchase to higher the due and year-over-year, rates. subsiding, began $XXX million at

compensation in severe flight disrupted during Team further benefited variable from of well quarter third million. Omicron were less headwinds many results member earlier, largest was also benefit, than customer on with X.X%. primarily expected Omicron driven by especially The partially headwinds, operating to effect, the In absences yields operations, requiring these Express of the variant demand. our surge having slowing $XXX improvement the the teams million net increasing the January, performance, A very offset addition, income increased basis mentioned by weather. surge I much estimated our $XXX improving focused offset lower results volume and due softer remain yield our X% Ground partially XX% by to severely earlier. with margin as XXX and winter outlined as adjusted as pilot among Raj a Express by capacity. higher year-over-year, cancellations an fuel constraining adjusted operating and points strong

customer growth. to income operating And share continued margin time, reduced from higher Additionally, of realized revenue quarter, third third over revenue despite had with the is and Omicron all income parts higher this wages. the quality time the XX%, quarter second points to up Freight's purchase operating XX% XXX% XXX in on delivering demand profitable transportation in the history, during of This Freight focus for and increased from and basis an year-over-year sequential many outstanding they pressures improvement another margin world. for thanks the the operating surge the and rates first quarter. operating Freight's quarter

and fiscal billion free flow in billion cash adjusted ended to We the cash $X our balance targeting over in for quarter XXXX. with Turning are $X.X sheet.

stronger we As emphasized as cash allocation. focus continue last I to on provides quarter, our flow extensive capital flexibility balanced

during agreement. pleased $X.XX I'm repurchase quarter funded shares year. a share results our benefited nearly with during contribution of to diluted from during such, beginning the U.S. we voluntary or million X% last was decrease shares the are the quarter, ASR share. $XXX under million 'XX and the shares the Total at As accelerated $XXX year-to-date. million by outstanding completed resulting shares The ASR of quarter third plan million have program repurchases per the made delivered share outstanding in QX to X the X.X announced pension Also fiscal

turning Now ahead. to what's

during materialize less We and component are and as uncertainty full $XX.XX labor the fiscal anticipated our we rate of to project degree and than range solid fourth The we QX, affirming wage year challenges year. to at of but and should a our in have December adjusted onset greater EPS in did diminished effects rate operating efficiency become have increases to the Labor-related environment $XX.XX. navigated network headwind those mentioned lap I business the a finish quarter. a

expense Lastly, it be QX. as a will tailwind variable compensation was in

capital spending. to Turning

We of billion have $X.X lines billion. lowered from forecast our extended supply time considerations. FY the from resulting is chain driven 'XX capital by change to spending $X Much

our capital are drive focus FY strategic we our to while still initiatives 'XX plans, returns. on in our developing lowering While remains investing intensity

are ensuring our cash We focused investments capital earnings and generate drive growth flows. on returns highly in to further

prior now projection the the plan to our adjustments. mark-to-market for to tax XX%, effective rate year is Lastly, retirement full XX%

in a the of on deliver effects the economic further across remains strong prices fronts, geopolitical labor uncertainty timing high ability While energy to developments, our fourth pace potential quarter, and including global many are market, we additional the risk confident and inflation, activity. and pandemic

Relations will Investor we be sharing on looking and additional and specifics these our and meeting adjust XX XX in to questions. provide trends With Mickey will in much happy soon and accordingly. now to on upcoming team Memphis. we address background to the continue logistics, June investor are monitor your that, forward We all very

Instructions]. [Operator

Mehrotra comes with Deutsche question first from Amit Bank. Our

I million, Ground XXXX is which Ground longer-term implies just a if since revenues the Ground to about I question. the mean, Ground you. $XXX for look in you I a be And number only expect 'XX? where are ask billion if you in of profits question wanted margins, XXXX, at talk since Appreciate this but fiscal margins contribution X.X%. about Ground are up the can Henry, to $XX margin maybe only up

present meat to long-term plan Wondering guys can for levers you a first more talk Where to year, this a in this bit It time give -- pretty the long-term around some the fiscal little margins. while, long-term just that. plan which as if relates could to you ready around us to reverse going up like the what Ground reverse you a that maybe in cadence it the to are the seems to So is soon. about trend? coming improve trend? fiscal be goalposts And next the are way

you the thank Amit, question. for

Let me address this. about can and it specifics then broadly Mike talk on

our improving are performance we focused on Firstly, financial FedEx at laser Ground.

with before for that he Let me of firstly, we're benefit start reason left he that. at the at Freight and John the is the and tremendous he's FedEx That's Smith, was there. Ground seeing CEO performance of FedEx the stage

seeing skating ago. John all, as that and we companies, the performance a to puck going. his you of where and double were context forward. where Ground. just different market expect made manage we team was give We capacity We, of -- e-commerce FedEx going and operating me we portfolio Enterprise specific first down So to But are will X to where be on invest also let years a drive the on a was this in we going decision saw of and

and down we're home to of FedEx And launched RPS, were acquisition time we beginning, history the the starting of If very of you invest. it look and to periods strategic them customers our Ground, at in e-commerce, of delivery building. we now we that there working doubled in are succeed the we when retailers with and is a e-commerce for had relationship from

us. in That of pace behind is period us. many is ways, that behind So investment,

forward. in getting all when talk that's We'll Mike. right margins are growth now, on package in about quality, in we network see that's we going clearly, put right June, focused -- the we focused sure we're and that revenue making you making detail we this Now what more sure and on the but generate right

consolidated you specific would margins to guidance I a No, this would and we that case expectation but not say only the QX. Amit, going the FY is would think typically increase as in segment is I'm it I add certainly, get there that QX, margins well. operating question have that are projections, about QX in in certainly the sequentially, I higher have, -- there in will for 'XX. thing year into Ground was than we our

next our take Jack with question We'll from Stephens. Atkins

great. Okay,

So another Ground. just X on

your per X that significantly and confident where package we've across cost cost I package had per seeing to I'm has has package well? per seeing are pressures pretty forward, ability Ground sure in position -- inflation cost per of quarters package yield inflationary excuse especially row your ahead at to it drive that me, you we're in a ahead in revenue your as we rising a think -- the you're outstripped with outstripped economy, growth. look How as business revenue you're and

Thank you, Jack.

surprising actually availability, X the last cost in we up. -- the of was think of I Obviously, were we have of that that saw and year packages; in was secondly, had going we this labor. because One lack inefficient and was X regarding labor labor sense some I of embarked on particular moving issues journey. we just the in what had things.

is the inefficiencies. numbers, the But unwound now on year-over-year our to normal. have We growth have, have rates. obviously, labor The in network back we we

we look with now it us. is And area so big on. competitive of focus quality it advantage Revenue the have dealt we we in future. for in a head us I It's and are our management numbers, a gives as think --

able we confident going expect a to Our of can going And our financial manage forward. in flavor of this us performance are we peak terms in December what we we -- are forward. that gave can

I but it's on the to just both set in quality? know, growth spike and unnatural, for was Brie, We don't want future anything year stage bottom and -- 'XX revenue add that you top fiscal have line. more revenue we earnings a certain

talked No, done tremendous we're about from a quarter. X% improvement We yield the -- this past obviously, FedEx job. we Ground have

As meaning so have that continue customer, I've XX% about we some repriced that we customer repricing. mentioned, we large of to still have contracts opportunity our have

we are about the of environment are inflationary And know that in, ahead operating we clear-eyed need stay that we so it. we and to

anticipate will and can head with next of stay as you continue our segments ahead you plan see customers, of a So that we we're required all right to because that into to business it discussions year's all now. high the be yield operating environment improvement across in will

Jack, if I thing. can say other X

We inflationary meets very, make revenue in, the we And locked even because operations teams It and commercial and important have every more decisions very that very, a now the of the is teams with and very to deal management week. dynamically quickly environment. committee are this.

take And next we'll Tom our with UBS. question Wadewitz from

offer see consumer. the to on thoughts some if you could Wanted

that consumer had and algorithm you on you And Raj, look consumer outlook. and a Mike. comments near also about that wanted buying just had, do of If make -- it on in term you when Ground work? consumer have you improvement tougher at does just weaker to really goods the consumer, any business? recently and just to noise that have you Omicron I the you get your caused seen that or Ground margin risks but think the So you make thoughts importance have about how the signs weakening, consumer But maybe Brie, is some seen think, I the U.S.? know

the Tom, growth of is growth we consumer to especially Brie us, even of an perspective, high going that thank e-commerce, now with the growth inflation talking able are difficult mid- about to forward. in to spending is to the forecast there's -- that positive was on to up that that -- behind we we that has I'm planning are you as question, generate tell environment, returns and as single-digit mid-single-digit already e-commerce in but for obviously period picked going down. February you big It's and are confident,

we consumer huge So numbers. in are counting on Brie? spend our not

Yes, I that would with agree completely.

this expect our things: we X% about, economic be do healthy market in BXB for a for parcel year, market at lot actually A we a one, to around we in see of outlook Normally, couple of As talked perspective. this modified our already forecast replenishment. X%. from we year, market have relatively inventory and it's that's still calendar growth

strong see frankly. earlier. Asia, I also from quite in backlog requirements as still there, mentioned There's a just coming We

BXB projecting the year to in modified XXXX. BXC We're From . we perspective, calendar going market, have now CAGR for So our is healthy an still that's to X.X% outlook. be e-commerce year. about a the long-term

of had So above historically, years, over the last we couple projected actually XX%.

year, So softer think outlook. our yes, in next sort profitable think forward we outlook despite we be economic have look of frankly, continue we already, a And some take is we consumer quite demand and for It down. QX. will can for growth as to market share

from our Jordan Sachs. question with next take Alliger Goldman We'll

do quarter I in and $XXX curious, the look the does that And get I staffing said How through we million fourth you think, Just in the recent as to fiscal you sits most fourth million $XXX then that the for think million. $XXX How was -- labor-related quarter. as direction-wise? think, the was quarter? costs mentioned, you company same that fiscal fiscal Ground, thing,

May Jordan, this frame on $XXX this in essentially, quarter. began it April, what wage $XXX roughly rate is order Look, Mike. from we in put QX, $XXX so million would magnitude of mean, or I million like I went million the element in really which That's, the May time it, based seeing principally manifest we here of to frame. so again, time today. are around

Citi. And Wetherbee Chris our comes from next with question

Ground. another then question on clarification Quick

I Ground the sure then understand, for quarter. double making back And digits the see I hit half think of on taking guess, you back wouldn't a in on step the I Raj, the expansion Just won't average so side. year, terms said that fourth I model for Ground heard the in you we margins Maxar. maybe of the ISP

need year the and do that be think business? Just up? of Or inflationary pressure? do back we inflationary environment, if that next things kind to you the forward. and year beyond contracts and it's sort differently you move type as into go it Does piece that up about would this this see that of something keep of with curious, normal of thing kind maybe Is just in of out kind of beyond open we pressures course

entrepreneurial Thank the flexibility. question first you, But win-win the with let minute. in answer contractors is scenario. us It model a Chris. provides I'll Mike a the our on business

service open. providers committed As remain to the and communication lines change, we of are market collaborating with enable those the when dynamics that

we will closely to contractors going our work we successful So sure hand for forward. hand that make and yes, in FedEx are

from where nothing QX. have not in past what margin be we going in and margins. quarterly of said prior margin up the But would specific QX terms than QX Ground the higher be to operating Will segment go sequentially Chris, consolidated projections. I

next our take Duane with from We'll question Pfennigwerth ISI. Evercore

you -- and Omicron to comment if extent could Express volumes And us impact from back I pick wonder you I impact and the ADVs Ground. you've gave you what the comment volume if seen accelerate up? qualitatively growth could and to those wonder in on EBIT. on to

to month. volume we Sure, it break at really in down by look happy to. Great the QX, have question. When we

for actually volume anticipated a we reasons. So saw softer of a perspective, from December couple than

The FedEx economy. Ground first was

sure for We we been make quality revenue network. to product constraining require we the have that get that the

third earlier huge were Both and, the we of saw network. in within places retailers The to was get actually pull in quite in had on the focused it pushing and we then peak right absolutely really second And course, early was successful. we service that volume November. and carriers sure season forward a volume the moving make were was the that also in

X anticipated impacts than see overall, in a some softer imagine, impact we but we got constrained for product And returns the did also we in December United economy in growth also Ground used volume the here in January heavily Express those into Ground the well. the when significant Ground, January, because reasons. was have for did then obviously we saw as at impact January FedEx you can as States So Europe. is economy network but And in FedEx

January, In and to also but And rebound. we in those got December. then was February, saw what was actually you Omicron you in that January. saw saw So other December a going impacts we on

his saw volume dramatic relative to quite So January. a from actually we in mentioned as a Raj opening perspective remarks, recovery

perspective. And a so at that's where sort from of volume we're

Group question comes Research. Scott Wolfe Our with next from

a got Ground that the for you And of left. think range? X big out another guidance on earnings be should on quarter to margins. Any ask I'll you've year, well Mike, shaking thoughts So range directionally then where we

UPS You XX%. take, an give is its to X% or at on margin. way guys operating,

get can't lawsuit? Is guys better. levels? kinds then be on thoughts used to Ground this you reason to a contractor You this And those Is any of structural? there

me resulted told counts in than a the were a a look, most waves, All months uncertainties would the And the is right, that Scott. manifested This have range we're case if Mike. labor ago of X have had we our where in at. greater that we dramatic proud in But to Talking of look, range. guidance different pandemic is than the in well S. another market we at the phase think in generations remains year significantly would it as the the Europe and case had range, had relative we wider U. in I the higher about fact undoubtedly that previous time, certainly, you where quite place magnitude as as the little any shift that started anticipated. we

change we the we feel what things way scale it within great the with accomplishment Lots is. and and So of along where moving of of is that team to this. enterprise a are the be pieces this scope

to forward looking the year. strong we're finish so a fiscal to And

kudos Well, the and the have the we're fiscal the the middle things beginning happened that in just of year big and the to setting all me say CFO still same on range our let in range.

and to touch team. on that. And and John upside. to and will that. So well. focused I've I for dealings that lead with know our we situation. right as person yes, of And we John are again, to FedEx get is a he's terrific. laser communication team I And win-win already mean, as as his that's open. talked I've We there and spoken don't Ground, to times, our several directly far to our in it's work what the contractors upside continue you about lines -- that have The we are

Allison with from comes question next Our Fargo. Poliniak Wells

want go of just to I to growth. the levers

the early increasing understanding network, it's there. talked to that optimize collaboration innings You collaboration, about

you're as color efforts? accelerate potential then chokepoints any And need well seeing that as those Just from the the could that on might productivity of some that maybe seeing further. addressed you're to before be

color. any Just

there has to e-commerce traffic you Yes, very market both between as question. -- Clearly, And definite the grown. networks. now Allison, our that for opportunity networks, optimize in thank is the the X we

call the And in as we so that. it, you But doing we're innings. early clearly are,

-- have you We're that strides big. lot this continue will here. in June. we'll of there's opportunity in to here we make and and moving work is person the direction But done, in when be a We already also you're quite share to all with

International. Now working what and in Ground with and Freight Express FedEx regard time please doing in this both forget and don't especially context, with is this over

focus that in on package at trying network you And share the June. with we'll to in details the again, put sure right the so clearly right they we will more -- price. making right And

question next Oglenski Barclays. with comes Our from Brandon

What since leadership division? Raj, there you that do the And in the can leader? the Richard announced to of what us of for appointment change the then management the maybe at some into has was team hope insight of get next electing large give process Express. call, you the rest out

you, Brandon. Thank

succession in time a knew set of X where I be have was planning for going very was process Of a finite course, that to this role we years. Don period time.

on with Americas in that And very planning region. the and our distribution groups, the interesting is in this X Lance We've have done mega-regions X going have also been with Ground, leading very with so so Asia we we carefully FedEx network the time we in working Richard John vaccine Freight. Similarly, a as responsible succession Express. through. FedEx into global of Europe. And Americas, it with the divided process already in for we've planning was on were and He

confident is in to culture level. place. players done Richard So that a we getting fantastic has are a the the take unified of going right the next and to job creating organization very Don

is you. and great We to a have going Thank bench, terrific. be this

from next question take Majors with Bascome Susquehanna. our We'll

Yes.

benefit You that. Europe you update as what improvement in your maybe in talk expectations, took and restructuring multiyear you what next expect Europe the right discussing about with next didn't year? the plan a at steps get bit get the Can of you point the drove spend could from be investors that profit in little midpoint down to the that of your but change

Bascome. Sure, Mike. is This

we about yes, And charges the the cost range first, moved expected as of have process The we've further as did we benefits through noted, appropriate program the recognize So was so the and unchanged, them narrow of that there. process. we you've felt the the -- is were that. range to of as the narrow simply as we down talked it we range just

of So as that to things A a I'll elaborate some it. was TNT so it beyond that, going lot on too. events, forward Raj have relates bit upcoming

Yes.

So Bascome, question you there. for the thank

physical forward. profit us we the integration. important date opportunity I of a think this Europe end complete -- us the for as going very is remains a big it's for month

operates reduce the we we're flights our airports. a serving to today, XX and airports. week, total to extend flights serving XX XXX, TNT By serve perspective, XX in we to Just XXX airports combining, it flights operates but -- going XXX put reach to FedEx

proposition way, at so jets better. the the So gets cross-time, are more and fewer there because airports, flights, oh value by the

in logic our TNT acquisition remains April. So of that happens The behind right sound. away

a a not we portfolio now serve launched we gap and do. With structure. an service and also do on timed intra-European this, We we we in cost priority deferred Europe out options. closing can also And have lower because are now

We and have gives noon us flexibility. it and end-of-day service

talked per to -- CDG savings of the there in about Mike and back was you there hour. again. X, May I lot a So things months back-office something XX,XXX was pieces X There hub, we The to there. already going on as ago behold.

in it's here much. we now for are on be And this -- going to improved confident stage so performance sets the here you from out. Thank so our that Europe

question on question Becker our to we unable next with comes Please check Ossenbeck hear line to and Brian next JPMorgan. and are Brian, mute from from open, is Cowen your move Helane your We'll Our function. with you. Company.

of lower is, your labor costs? bit you facilities. you when that have automation verticals about and that more say just And geographically? be that then specific either just little share think X my robotics potentially in share, to I mentioned shift with respect I a Can could lower you other or coming Brie taking a where is just that, questions. can question use talk is One the -- little about you're

strategy. talk Sure. revenue growth about Happy to targeted our

this a we business we value the And about business I have which our earlier. of faster seen pretty consistently. over from in we've as some our that the here enhancements is year perspective, talked our last over to So our large segments made proposition, have market value strategically last several our than segment in segment. grew customer actually goal From And perspective, a network covered share some our network. share significant small year, years small X, taken or share the and we've take

we we in have we're competitor, our upside share And compare things in ourselves When mentioned, BXB that. very are focused some to on with strategy. e-commerce. primary and We're as So as disciplined very very really I still acquisition as business pleased small both doing differently. I our well

We we choosing mean? have that direct are through We're partners relationship acquiring the being going them we that I not We're selective masse platforms. are small to with customer. the en direct. What with do very platform want because

We the in loyalty have no a one that program has. fantastic else market

discount LTL of primary our strategically do. to our We our portfolio, which parcel earned using course, bundle no competitor can in are longer

business this in predominantly opportunity We're both Europe very And share similar I'm tell year. as and EMEA business we've the you our share small grow small will States, a I large. than a taken there playbook. perspective, historically, out faster optimistic I've that from well. very talking United rolling So here although are about seen

not not allows market of integration work our Raj well. we just e-commerce. out that is but premium From you're what saw in about momentum an optimistic that awareness, been Asia piece This more The that got successful to perspective, Europe some have region year. very intercontinental see very see pleased with share there. unleash proposition. been out those EMEA strong e-commerce a that Europe still, momentum to They've as Europe for physical brand a we but we're We've some as or a share perspective, of pay could to share us we APAC value value as from very do real I'm and focused be covered. incredible well take next as of opportunity, and just proposition -- and we the Additionally, excited going

So details that any your need. other answers but answer question, I you to hope happy

a this managing to because to opportunity commercial done give job and of our continue quality shout-out remarkable they've revenue really growing a share that. we'll to teams take me do Let and

of On in the coming I -- the robotics very field itself especially to robotics the changed in so, front, actually question, and And developments think it's or last robotics the Helane. there's ML important has because the year with a significant picture, field. AI

we opportunity are move here. huge facilities that can again, you Ground, already a lot And look at we if for -- a now automated. we we further of So of in think it's the have facilities some us. But

on inside with partners and on to several robotics autonomous and processes working obviously also are working involve vehicles. the and We hubs

the road. We partners have for FedEx like same-day delivery and also over on Roxo demand, we and have Nuro

implications to lot a could in effort very come. the and direction because in big it's strategic So of have this years

for So question. again, the thanks

Raj the coming this labor market tremendous that the the worldwide. result Mike. been case point into amplify It's unquestionably is robotics amount constraints a capital to Helane, space experienced seeing the as Yes. of made have that you're of

the loading see, that. all as that where the the an the made particularly because how few the our a in really in the that in and of the really is works here unloading here get opportunity investments to there, is certainly, are facilities, given bulk visit within in of when facilities, automating sortation deployed that's So to trailers you'll the And labor Ground you months, we've opportunity.

So a very raise. relevant point to

question Jeff next from with Vertical comes Our Partners. Research Kauffman

with supply-demand were recent get you network. a changed the Europe. lot back on the the Eastern Obviously, events throughout to question the seeing marked to global like that equation the improvement and I'd has in

version domestic us bit you February think March? into earlier, Omicron a we've giving how I I does side? of move talk What from of look you new on events impacted international like And the impact about on have got Omicron And affected Asia. in global what's Could more the COVID you capacity? little the as Europe, were mentioned. a a Express. So Europe now in going step-up on globally Eastern the you view know

here. up I'm start and me will me sure let Well, clean Brie

Firstly, of kind thing though we it's almost of that funny with. that is ravaging couple Omicron months in sense. us deal to Europe almost The behind it just in was now ago other conflict And tragic. a a even bigger but memory things have was is in now really

we impact many, to economy -- but the see. that ground is years. And war many like the that First something in on have

starts cost I fuel. it of with think the

potential around long up inflation that anybody's and to world, cost fuel project not the I'm goes goes guess. because As How is this lasts economic going the the that, of slowdown. forward. then up

will with have situation. we carefully. dealing to be watching We're that the nimble very situation and So China flexible in

operations in strong. working keeping still this today, is job And close situation. very mean, a demand Our we team going. of in system as -- I amazing we a And very more loop again, our is are to But employees by operations dynamic the normal speak. have than closed XX% just our our

to know, is along. don't So we if something got we go I more? this Brie, you and nature very fluid as anything watch got in that's

not to add. more No, a lot whole

constrained. And high are see we because about Out capacity perspective. an talked now, constraint, the as is Asia, impact As also, some the right despite the of low. seen still from pretty high consumer we mentioned, a I've have still as of we seems demand risks not as levels current environment a but inflationary I result, because commercial capacity commercial inventory mentioned, so global of

intent. in some I have United share to Right an of on we we from Europe. States and now, still coming the Europe well as demand out about, take our now, right talked that's perspective, looks believe Asia. So a as We're good keeping eye opportunities, as

we're now, as adapt change do talked feeling to as But Raj and we so. can right So about, things pretty will good. required

Scott Schneeberger with from comes question Next Oppenheimer.

kind clarification on last that of question. a Just

that the some to it continue now of a long business Russian us something have a is switching indirect some Russia of have bit momentum. to size just through you the you discussed to and give we then very and we rest strong You Freight about Eastern conflict, the a of as would mid-teens you Obviously, of And just continues time expect calendar to move margins? been or expect Could sustainability gears. Should talk much in that represents the of like please how you? change issues. year? for look collateral Europe you Could

Thank you, Scott.

the think that you're I Ukraine, and think the talking impact the for -- specifically the Belarus, if question I got is X Russia if right, markets, not material. profit about first I

happy So that -- I'm take if question, you have to it. another

Freight, FedEx the I'm progress that made On have just delighted with the we there.

-- in made making, We been it's have to speak. years so the

in on focused as FedEx let and operating point, remarkable make heavily this me needed. companies are We And also job stepping quality management helping efficiency. up again, Freight and revenue other a doing operational is

is that and expect this we winning think to a that continue. I formula

turn time, conference And for At the Mickey will back Foster to that question-and-answer or this does additional today's I remarks. any conclude session. closing

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

participation. conference. that for And does you thank today's We conclude your

disconnect. now may You