FedEx (FDX) 24 Jun 222022 Q4 Earnings call transcript

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

Good afternoon, and welcome to FedEx Corporation's fourth quarter earnings conference call. release book earnings website on quarter fedex.com. at fourth and are stat our The being our streamed replay is call This from available about will website for X year. be the where

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

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

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

now Carere, the Vice us Joining Brie President Customer will on President COO Mike his President CFO; and share the and and quarter. [Sic] And Executive Raj [CEO]; Officer. and Subramaniam, Raj call views today are Vice Lenz, on Chief Executive

to amid This most Operation where critical we Direct to And in continuing weekend, relief of have hundreds tons the across to move for team U.S. International. team in from for shortage formula of pounds during Mickey, and Ukrainian Europe to Relief challenges. United Fly of start I'd coordination good our is forward will by world medical this with to Poland response XX refugees you, the afternoon, thanking displayed Formula, the like Thank everybody. rippling recently XXXXs move the FedEx unanticipated baby of States, moved

financials, of proud share our our and fiscal This XX% billion, value proposition challenging to of face 'XX to and long-term of turning global in is the revenue our income a that up operating ever $X.X increasingly billion Now, strategy. $XX.X highest I'm year-over-year. testament to both adjusted backdrop. We execution with finished continued an against our

on last through the shared many labor we by I worked caused As network have call, shortages. inefficiencies

Although last pressured global wage conditions rates stabilizing. slowed year, and remain Still time recovery this performance. half higher COVID-related than they're second

and down 'XX. compared were ordinary our across to implemented yield with up the fiscal as segments revenue levers the board margins improvement that strategic drove forward. extra freight year-over-year help all up going While of XX% and macroeconomic offset transportation ongoing yield focused up per double-digit to We one QX package the yield XX%. remain composite the quality year on volumes per and XX%, ground shipment pressures We key Express improved successfully actions driving

to improved pressures, revenue. operating Express, higher in to the expenses of Turning inflationary income face we operating delivered quarterly related and even

demand. Volumes yields declined volume as actions a improved of higher well Asia constrain has downs modest uncertainty our actions overcome us management and as revenue volume lock allowed headwinds efforts by new result our of as execution from experienced revenue and At economy full driven Europe. COVID growth in we Ground, due pricing mix. Our to to year-over-year FedEx customer to in geopolitical slower

see expenses operations. these Ground of We preload operating pressures and to will although continue continued including utilization maximize pressured through to facilities wage leverage by stabilizing. higher relay rates transportation be to adjustments, operational purchase opportunities and multiple existing we

through multiple availability address proactively labor head to continue on levers. We

for grow every have stay engaged safe, the the frontline retention we ensure and the will package on efficient of not highly is we based handlers launched recently scheduling As tool, to shot only we staffing volume, and with ensure that and we increase a company. the right will refine workforce level

line to Additionally, commercial dock and seeing operations as results last to focus implementing of increased margin quarter we once our teams operations, to by benefit of on as QX CEO Freight job continued revenue Freight well well early with operating ground in [ph] that again are execution. several outstanding continuing his the quality. efforts solid the technology these our year productivity that optimize are as FedEx on first for a and XX% our freight initiatives X% haul full productivity driven done efforts mile. delivered QX. and fourth based [Lance almost driving We're improving from Small] dock A in fiscal compared the to

ahead look we and in the put we more cover macroeconomic the stress continue globally both chains 'XX, this to and U.S. risks expect supply fiscal trade. shortly. will in As to to year Brie detail on

Let confidence though our me strategies. key reaffirm in

a shareholder and margins capital strategy, driven shortly. revenue Mike improved on total provide return color As quality, my is which CEO, by maximizing balanced more will allocation focus higher

hub year A flights improve Importantly, another where on our the efficiency our example Charles to stage and driven great our strong investments set lowering of focus The into Europe. integrated operational network. us network we consolidation and going serve are of enhances our allows in de cost foundational lower have cost by our is for Gaulle to long-term many to to serve.

For CDG April, XX%. number the by intra European was Europe airports increased flights from of of service by instance, reduced the since number XX%, we

will in ’XX. We drive those are year that actions fiscal confident bottom-line like improvement

what's Memphis in And deliver we hosting As forward, FedEx global to our speaking few a investors team, what's I’m lead forward our next. are in move to honored to looking of we days. next, enabled who

deep and is we understanding two-day attendees to leave strategies, financial Our of how a execute. event with goal for to for plan and this targets our including priorities

but has words of I before Express FedEx with it nothing short President few turn to CEO, whose a been to like I'd Colleran, say career over Don Now XX-year and exceptional. Brie, about FedEx

for for in that international including new one the helped team our a the our of sector he most As some and led foundation capabilities FedEx significant FedEx XXXX, growth the of customers, role pandemic. COVID current times, of his our Since pioneers through challenging assuming of Express has lay portfolio. the the business, he global launched in

announced in role executive CEO this Express, you FedEx As Don, appreciate FedEx in September the We March, several who CEO leadership teams Chief end-to-end to Officer of strategy give our Customer and into her but let of that now well-deserved the And Donald over me to it a company. your our advisor this next even move will in under week of focus from Smith's us retire aligns in on was experience. countless the nothing we to last wish service will Brie, named best support contributions year in December. move Richard transition chapter. to greater your and customer and turn commercial in

Brie. So

this our down Thank honor 'XX fiscal privilege 'XX deliver to you, quality on fourth to and revenues. take responsibility Raj. reflect for shareholders. to a and on then growth to drive for our customers year quarter drill an It's I'd like

deliver actions XX%; locked a selectively we contributed FedEx proposition execution FedEx commercial a Freight with our areas, to reduced generated primary and volumes levels. service flexibility remained another challenge. this will continues business. across some affecting COVID to Express customers. FedEx I FedEx. revenue FedEx combined our Fiscal I our frontline we our And environment the X% with drove drove value down, to how outlook and and macroeconomic home revenue X% operating yield of exceptional growth focused the [Technical our XXXX. our year-over-year part we of am commercial management, to Finally, consolidated quarter, growth at We expected delivery staff proud lower past, volume revenue growing quality ensure In fourth revenue which also our team of challenging, executed Express declines, In geopolitical yield of managing FedEx management to volumes was the our management our demand. intently quite and volume year-over-year, XX%. FedEx. do uncertainty At the as partially volume discuss and was offset that our revenue phenomenal disciplined FedEx quarter Freight sales volume slower deliver leading The The strategy package X% of Freight on respectively, Ground for actions Ground by and results. declines creativity for lower of team conditions. growth, market behind Ground XX%. members economy these X% banner year the service is on Difficulty] team ensure to economic and requiring year the down declined due and against team FedEx increased of despite had Year revenue FedEx rose economy job Ground for could factor change was of the shipment fiscal quality XXXX FedEx quality.

and Now, continue let moment spending XXXX. to discuss services me their keep a take spending will anticipate goods. will tilting from We towards consumers

We today's decline. but late early PMI after on dampen is more build backdrop, June return and a to flash demand. year May been expect this solid restocking volumes. stores. to slowing. This strong Further inventory expect pressure we BXC this will do activity With industrial consumers last has was sharp Through a freight year

flow dynamic chain China export Our lock We growth disruptions of conflict international throughout disruptions in the Global and from international anticipate in volumes. trade supply reducing environment. and to the businesses slowed year. navigate the downs limiting to related a do continue has goods fiscal Ukraine

estimated that pricing recovery in expect fiscal year Pacific QX is of to XX is We capacity to take in recover to pre-COVID expected Europe until will still some passenger our continue XX. time. on before. Asia estimated constrained lane Airlines not Airlines environment is to expected less airlines year on Commercial favorable QX Asia to year than is Belly between remain calendar recover recover to XXXX. to little is and levels, Europe calendar Resulting belly in and FedEx that capacity to year QX a recover passenger fully calendar to Trans and XXXX. The capacity

discussed and been into The forecast. 'XX fiscal forecast earlier assumes incorporated I our economic volume Our normalized have environment. a factors

volume slowing forecast prepared Our manage if growth. volume has to through also environment single required. economic low digit We've plans

fiscal and a strategy. revenue costs lessons take actions very economic impact targeted execute years. will softening, will growth In mitigate incorporating the the further to we XX, the of over two last extraordinary We learned

our on assets. attractive on We provides will prioritize pursuing that intent quality yields revenue business are and

the pricing rational in surcharges the expect especially the environment industry. here peak systemic also believe We We the will around for durable States and are world. changes ecommerce, the that changes, United remain

inflation reminder, inflation is our plus possible response continue market I pricing. to because tools both in rate. a monitoring has to fuel getting unique am get FedEx the closely as value weekly are we prices. have quality customers who fuel We will revenue confident we surcharge to And and Strong we adjust target capabilities.

our favorite of four about capabilities. talk me Let

to First, provider are and LTL the we portfolio. really only our bundle parcel

not. Second, on FedEx competitor. two while our significant very is more locations over FedEx Ground has faster Ground Sunday, Ground UPS than delivers does advantages to primary FedEx and UPS Ground

the both FedEx. our BXB challenges. FedEx strong Third, delivery provides executed every extraordinary In overcame U.S. tech and a and carriers to doesn't we evolve are provide digital strategy Express we to this signature. revenue for wide an offering delivery We industry for a health year world's robust continue manufacturing, care, of picture for And closing, on have BXB and nationwide and for portfolio. proof customers. will announce ecommerce we first our has segments. quality intercontinental been high fourth, the generated ground require fabulous a growth residential that solutions

fiscal the to in place turn for that, profitable and And over a right improvement. Mike for and XX growth team the Our margin I'll deliver it dynamic plan remarks. his with strategies to have incorporate we right And environment.

fourth of and results wages outcome reflecting quarter and to agreements. to these of initiatives the basis continued well expense compensation to XX% good a We each strong XX% costs roughly and Brie of our an from X.X%. carbon a Ground described shelf There share wages management that year's Yale as approximately of new higher inflationary higher insurance comparisons as including are transportation. million revenue to increasing I'll for resulting XXX for These million, enough headwinds at XXX ground, With adjust $XXX everyone. cost the year-over-year insurance operating multiple $XXX goals. overview primarily our for University cost revenue as variable safety to ground per consolidated standards well a to increase improving of results, expense margin $XXX X% last afternoon, for adjusted underway margin consolidated Shelf Brie, with driver fourth revenue vehicle higher points expanding adjusted support aggressively was in items income at as the emphasis of reserve purchase improvement and increased claims. you, along approximately rates included turn X% neutrality operating in risk, highlights year-over-year Offsetting were quarter million down reported The million contribution favorable and operating as had we not of earnings headwind segments. Thank with Notable cost transportation certification mitigate technology, approximately and year-over-year, loss both XX%. cost our impact strong mitigate in provider the XX pressures. the reflect a offset with to adjustment an million, that projected service transportation. the higher purchase yield experience, to

by improvement by to margin further the and net volume the yields, productivity operating improving nearly including income than And support Looking will points was more workforce in of of in declines. continued variable these X.X%. driven by impact labor favorable adjusted revenue profitability. with and market basis increased drive initiatives offset specific emphasis improved was also Stabilization forward, traction areas. lower compensation operating will year-over-year Express XX the quality with XX% conjunction higher This fuel

per has avoid also COVID cost increasing to are strengths for testimony profit XX%. and elevated revenue leader the our well hour only the crew to finish continued quarter, but XX% a the routing to further growing results layovers growth LTL been freights to not had incredible year with as quality to as changes an share as network the accommodate Freight addition, build the have profitable with airspace. flight stricter on we and outstanding In the on operating as locations These regulations, focus conflict COVID market. and revenue operating fourth protocols, in as had

continued per of momentum Turning projecting earnings to a XX% share range X% we improvement. are to FY’ XX, adjusted with

including all We beyond utilization operational we increasing executed margin on expect inflation, and quality in priorities, expansion basis assets. transportation as driven segments our on technology key improvements our of an adjusted revenue enhanced of efficiency

are quarter pressured. translate and continue into began be quarter continue As in expect fiscal demand we seeing volumes XXXX, we the June will lower the to fourth experience customer first

to our go we protocols, fiscal comparisons strengthen experience We continues Express Express due addition, COVID industry segments constraints network been to year-over-year volume In across has flight wide. all and crew as expect do both highlighted year. of transportation air the to as efficiency through

recognized non-cash our In the asset pension This outlook includes will line expense returns the the year. an $XXX fiscal headwind through realized lower million addition, approximately over XXXX. be in below is evenly all that

relatively match XXX(k) introduced plans retirement pension will be primary as to a plans by XXXX. expense expense our a Our beginning reminder, new expense. pension will entrants higher new XXXX. U.S. XXX(k) January in And of closed higher offset operating lower we a plan be flat with company And as were in

related adjustments, full the to for and projection effective plan prior Our costs initiatives. retirement mark-to-market is rate business year to approximately the tax XX% optimization

X.X billion XXX capital supported of fiscal free approximately dividend stock and of XXXX of repurchase our our of a Turning cash payments. adjusted flow X.X billion to allocation, million

with funded the and we addition, $X.X contributions in voluntary solid million In ended a XXX cash. in pension billion year

As we remain capital. and focused to shareholder fiscal look on total thoughtfully XXXX, driving allocating we return

as invested billion an the the projected First, we invest estimate initial at XXXX as roughly as timelines. X.X% percent projects. X% capital vehicle under investment Ground is our which fiscal came at well Express, chain will same decline additional investment rollout as extended in attractive than XX to billion vehicle be revenue We that our XXXX. as in during X.X project a will replacement, continue fiscal are lower automation Fiscal electrification be to XXXX, Facility supply in of ROIC expenditures including compared expenditures well for aircraft of considerations to to as CapEx increasing initiatives, offsetting $X.X initiatives. fiscal

we of to ability significant projecting announced we to contributions increases $X.X course, execution lastly, the XX%, ratio voluntary pension repurchase dividend of adjusted evolving XXXX. in over first These to And we of which shareholder reflect I'd as payout add continued of market. $XXX plans. we additional our by adapt confidence XX%. stock to our Next, an over and U.S. are expect million the to are raising billion week, advances return fiscal in last our the half And

fiscal So foundation a XXXX improved for strong we with and driving enter returns. profitability

these geopolitical We are prices, our the the to of risks about revenue And Memphis. this in actively activity, adjusting lowering fronts, week global profitable to here In margins, changing shareholders. mindful uncertainty focused pace and insights investor sharing including driving our circumstances. on we improving expanding developments delivering and across forward are shareholder plans many further economic year closing, to by energy look value of returns we are pandemic meeting capital additional for at inflation, that and beyond intensity, growth, our next additional

happy to address Now we'll be your questions.

our Thank And Brandon question Instructions] Barclays. first with comes you. [Operator from Oglenski

afternoon, discuss Brie, give what Look good priorities could sure. everyone. and Raj prior be new next the know Smith. FedEx, XX And very your under, obviously. revenue guys, this Hey, we'll you up call congrats roles, you to there's future one Memphis after us, Raj, is I on want on shoes the And But and for just big after to leadership week are thing years for change obviously, Mr. coming quality. keeps pretty that and big fill in a

picking just that more you I'm least up us on? at give into perceived could bit a change, little insight So that

to and have a minute. a number revenue with is little had have revenue quality. and build you're you, My firstly, from. strong more right, building start Brandon. we're about talk Brie to in a And element have we work fortunate And thank But is talked foundation XXX% very The we we over on here a in And so that. we're years, Fred again, about the then pretty straightforward. will quality come will strategy I more strong one very foundation. the to about closely bit opportunity

The be allocation our going second improve companies. will part shareholder on of the to disciplined total our be capital And we each is and of operating operating margins strategy in drive extremely return.

forward we'll it quality. let But you sharing to to turn about over talk week. Brie more So with to revenue me next look

Sure, thanks, Raj.

times. I very yes, and quality market couple a mentioned operating revenue think, large a market. of in a it's not we've homogenous We're

to the of of And value have getting incredibly spent investment proposition. today. are We a place we we that proud lot are

focused value very on who that. we're customers so And

being this customers in targeting the really and And targeting provide. And BXB, selective reliability targeting so We're market. we're we value we're business. small speed we're the that

And our next question will come Atkins from with Jack Stephens.

And it XX. helpful. And initiatives the us be the think that. pressures. walk you. function at you, you when Okay, for in for you like guess, expected in least, we or coming question. a continued the that taking kind perhaps pricing my you great. seeing your comments so, last inflationary that disconnect guess doesn't is maybe guess Brie Ground to there? over lessening to at just margins if you pricing. been Maybe benefits we're you Thank going of in is particular, inflationary with look it help of points XXX Thank of basis I I could of where we've be some feel as That'd I through forward, do noted are year look down you these from see some above the able

Sure. Happy to Jack.

we're revenue quite from actually able with at if quality secure think that fourth the at pleased you perspective, Ground. the I we a So were revenue quarter, to quality FedEx look

Ground, up got actually mix to up that within think is small mix. other pleased we've also is mix things right fourth is business FedEx and in that quarter. the two the important the we're I of very know BXB

we're are pressure I with and each for quite say then at confident impacting pleased that. us So move, is the of pressuring But we FedEx come we're with honestly, what very very more pressure as on will and economy, is that. course that what progress. some getting so zone move the depending that putting weights each we also that will forward, sell package was we pleased we're will Ground, down, within is

and further We Mike. I how revenue of have is to challenges going we active the repeat additional that in maturation sure on further got make started emphasize initiatives the to, that the terms the We've won't multiple obviously. last it's we too, expect we coming year. that this of front. labor to by underway, Jack, margins later singularly want initiatives I on But productivity And of rate the driven in have forward. And we we couple last terms we've alluded efforts costs in of wouldn't experienced quality the we year, we'll drive mitigate not of ground year. last get increase this of years got ones liability

from comes question next Citi. our with And Chris Wetherbee

an guidance, you some wanted your the you've least acceleration know go that earnings wanted I been of the that from great, of in I to square sort we headwinds fiscal XX, with But at of sort mitigated presumably thanks. turned as get nice normalizations about I of tailwind kind perspective, or seen. facing least is I a Yes, to economic of forward. are or forward. guidance, EPS are there being body end bit obviously, language sounds range Hey, accelerating about optimism Good the growth. where a there, think wide afternoon, it's the And little are, at just so we earnings forecast, bit ask if we've to you that? guess a range, soft with headwinds, what economy like a the power, earnings from little there as in in help with that us it around but upper some the terms

navigate backdrop further a uncertainty in out balanced mindful time, wider that's we is the there. last that are range But for the the there same and year this will though, and we Brie than amidst put environment At certainly say, that context can exactly the yes, it's little confident by let’s give we're Well, thinking we the achievable and ahead. of consideration. out the can Mike. I It's a around outcome that perspective. us economic conditions for range, then around give Chris, uncertainty

appropriate to. it that felt we need where we to So was and get

from thing back at the I volume half, then go the us. volume we especially little conservative, kind think from a perspective, they're bit for the add, as we the number our were as that only will And the domestic I range comps and a itself. one, here the other we year, perspective, of forecast actually look through in in easier a

both So kind the into of the the we've economy and pretty consideration the we year-over-year, obviously taken but feel now good of about size right the market, range we have.

And comes Mehrotra. from our question next Amit

Hey, quite appointment. guess preparing everyone. targets. so But over long-term a it's question profitability really to the you quarters, are the mid high. thanks, a of really miss operator. provide success Hi, incredibly lot several that'll the And Raj world. while, And on the guys fast the moving week. of targets be market last we've even guys it's is, actually next all inflation Wish uncertainty is nearest think I been really congrats caused the in you welcome. an to seen profit I to you the that's

to around and target, engage opportunity hit that, if the the give But would don't where those businesses? to an and to it question here there you guys likely confidence of of just to investors think XXXX, experience you're with And that with guys idiosyncratic come some in is gives related Thank up ground able to set margins respect multiyear asking targets? you. I XX% as the are margins, underpins to be to given confidence have do us I think targets, guys EPS XXXX, the hopefully, so goalposts gain would question. helpful element that, helpful if That related last to or able express most to targets. in be year? And is these should these cost willing prepare what growth you around company free Mike, being multiyear and efficiency be you out now, and And giving with going that come to the to it from? of multiyear confidence Where is, I the to know ahead does

your much very question. thank Amit you appreciate and also

have and it unexpected, inefficiencies, many we has expanded they that challenges had just networks the We were because rate. of our year from network $X.X one, as portfolio. last took been challenges, quite -- we unexpected ecommerce out XX, some and quite -- billion challenging as due then respects, labor in And some FY our the labor to though build

a ahead, that productivity look the we we ecosystem and technology have that several for we essentially portfolio fiscal things ecommerce. we we of we doing built, sure foundation are of improve make are infrastructure critical center ecommerce ecommerce that And that Then a we year lot to XX. our as through So are for on the launch initiatives have, the will an in in this customers.

that. We our improve performance before, Europe. talked to on as will And continue focus we about markets there for in revenue quality I think then the

we're we that execute and things gave several can are do there ranges and Mike? think confident to we the I so you. And

And first, transportation segments. all improvement further most our one to look, three will XX, Well, highlighted cost ground the on Amit. week. be details improvements at be XX. FY elaborating I significant ground certainly, Yes, we looking margin we of as for and said, expect at efficiencies elements at I that FY will And specific relative next

you one the feedback guidance made, gave get for of and us there XX our year that fell So exception we there understand fiscal appreciate take the absolutely and in specifics that target ago. need range will I the about within actions you comment EPS we this there? to are a annual what that give will

I range given we considered. was all it within along appreciate narrow different got been may So twists while things indeed what there, turns the was there and of a how have way, terms in pretty

Our with next question will Wadewitz UBS. come from Tom

elements said new to Yes, the we're great. the others looking the Appreciate is or kind new next of that, direction further And detail of it. week and strategy. really also, forward

to smaller look When So you these some a to XX, of growth, the is quality the of guess focused fiscal ago, a it you just of just a sense to Program, see improvement, it is Express magnitude get And is trying component years relative cost your the kind cost of cost that, two that. but a of at frame looking that's is we lot years back XX what big I And sense of and it over and Can had also because a time? revenue analyst big pieces, we're to your is improvement, that. today. of the Or pretty forward I the giving that's thirds would margin look on took of had you earnings of meeting of couple it kind that. Improvement give of us can grow you something growth?

guess out I is quickly price and in just a how and fiscal measures some to figure how costs come versus of and XX? that productivity through, component the revenue see of quality big So, we trying

a XX of lot Tom, here is volume terms that, projection something the into week. Okay, can lot time out digit. elaborate there's is growth of as the in again, what's on more much for low fleshing but and whole that details, that spend next single mentioned, Brie we packed in a and But on

get how to resourced our ground, efficiency provide, emphasis an the we the of have people yield now efficiencies I opportunity, that. optimally further because the on of to talked networks that about and and the in we're So value capabilities initiatives the sweating capacity investment in and productivity there. environment, utilizing and targeted significant that, while do there inflationary schedule per facility of we sort have our how meaningful, is is driving costs that and Raj we continued our that lowering and mentioned underway. assets because

to allow a to. point will initiatives the results there's no that achieve of of it's to the get real to sort single magic to need enterprise but that concrete, we So number us bullet across there,

ISI. come And Evercore with Jon question from will our next Chappell

is capacity Good profile Thank significant some you. afternoon. in added trimming months the to clearly Brie so entrants over the and so. amount there others in high market who's lot XX of or of hired next of capacity a talk a speak,

may that also you've the XX FedEx’s and and pricing where capacity As months? laying you maybe, some to the about past, the think business over its in what's do general, network some some off for the people and in next in had labor what spare issues opportunity risk

Thanks, fair question. Jon. Very

Number so think customers really value I us. focus absolutely can one, planned we've that on couple things. conservatively, we of that a those

of I a puts years that good long-term volume. have We stabilize us of base our negotiating place the to last tremendous I to think in a couple done, the contracts mid- think over really job

selling So to network that of from good our And do Mike's perspective. an disciplined kind position. growth. really disciplined kind we're of alternative from targeted revenue point, a think soften if economy things focus perspective, on via in to focus And will going an we're the primary quality, be versus I

some I some pretty we of about good feel the competitive where the despite while headlines So are, of other reading. activity and

with will Wells from And our Fargo. Allison next Poliniak question come

evening. good Hi,

to eventual margin initiatives there So there productivity productivity outlook, grounding? on quantify was you quantified any then ground? with first to wage inefficiency, a that will labor line in to what is Have what lot XX, contribute color is the in think the particularly of headwind absolute those volume on your expansion way initiatives Just a Thanks. in out that, based there quantify there? And or to a way increase?

XXX yes, is at labor availability Allison, The XX, of we roughly Mike. aspect so ground that million. Okay, inefficiency this network pegged for FY the

certainly prevalent was first the the that So of year. most half in

that So that. addresses I think

part For your the second of question.

productivity your the digit I lot volume low a know initiatives. of single context of increase,

would and of the better expansion related Is talked there software some I the those doc, to side. think here? that the be that you on look a contribution as we margin way from that what XX some to improvement to understand initiatives technology to about

Yes.

first the just X% just of highlighted that quarter-to-quarter. Raj leg improvement, roughly So,

you impact liability definitely a the of even was operation more though we provide the have earlier that more are the is of That's fewer efficient safe and risk. opportunity flavor supportive easing, to that a about, the experienced. to, That and there the that ahead going talked are bending and We hiring that people to new opportunity So cost labor people about question going significant market more certainly, margin than the to a there. I gives forward.

behind So week. speak it play further team happy good again, be and come all these that elements will the to plans to to next

And Alliger Goldman Sachs. moving Jordan on to with

Yes. everyone. Hi,

the revenue referred way mix view these give how improvement, some about to strong at you've whether of yield how as is be any to as core price the to improvements. surcharges? or very fuel So components about big large board, very picture you management, across the least think Just yields it there think were picture other to some surcharge, noted, Thanks.

Thanks, Jordan, question. appreciate the

So QX, was the quality. fuel specifically for largest of driver the revenue

as to our and really to of thought quite the portfolio within best hold our team We frankly, on I also most managing job earlier, the a profitable volume. did, just mentioned I tremendous did

of And proposition overnight really the domestically, stabilizing economy look Express a you we volumes within job our the the huge kind international we volumes domestic decline the actually perspective. versus our did decided internationally, When HD, deferred the we go. on in same within decline, job right thing team Company see the a intercontinental, really there. then the lower the did at let moved of good than good stabilizing of will when the value had highest volume volume we a look actually year-over-year actually, you way products. So to ground, we difference And on ground of happened some course, commercial from

So fuel largest the great was from job. driver, revenue quality a also perspective, while did a we

really from get plus renewals, the working most perspective, for and making mix continue premium they're revenue We a our sure of get on inflation part we portfolio. the to

hope I So that clarify helps that.

will next Bank Hoexter America. with come from our Ken And question of

really entire almost Brie, the Raj, the since and positions the start afternoon, pandemic. of on Good congrats Great. team

and a what's you've it like CapEx, about return an on growth and or how from prior and from your should removed going that, now about CapEx talk of your we distribution a the investment on balance built next about activist, lowering focus again, had a kind maybe you've week capital out of sentiment a and mirror conference. big seems Thanks. So thoughts capital getting week how that shifts now maybe the focus, your the involvement cash and everybody's allocation huge forward. talk you've about coming thoughts ago, talked But maybe think obviously, of about

just conversations Mike then the the say, of about question First specific I'll activists here, with the let here. but all, talk

We plans place. working are nearly in Day for dividend the a and Investor have and been the well on strategies year

preceded to we this that them when then, sit headed. And and we long on plans, is then were we alignment any know we conversations And strong clear had had down with we opportunity so had anybody. the where very with

So that Mike's was I talking wanted in about a And been to is place time. key well make sure that a you what plans part understood equation now. of that, been that this the for long have

ground forward. are the to detail able will more forward industry next continue said, that we We've invest built to don't me hard trying and fleet. just I'll week. I'll everything [leaf] value And at get that from realize away to of going [ph] is to up Express much I to as that that give say, we utilize were look, we've But a come down, in to phase that going you're to are can leading, and the capabilities of but And so leading that need -- from assets. before going Okay. be network, highlighted we further significant the air going the as

in technology different and aspects creative We to utilize will and certainly be it more ways. fully -- investing

largest shares that I X% the it we been significant. having you, building striving certainly and And dividend transitioning, So very evolution but increase repurchased long to capabilities. too, fact, last it's while was these just percentage now in looking year, We've roughly our to was remind from of would a natural increase. the second increase

actually percentage years ago, So a a increase. we larger had few

terms of So, in I evolution elaborating returns. and capital look where allocation to just again, it's week. driving natural we further improved are forward And next of a

Ossenbeck And moving to Brian on JPMorgan. with

the Hi. Good question. evening. taking Thanks for

impact actually comes there's sound and So demand or to mentioned, back it destruction [indiscernible] Brie any want better. of the fuel, I didn't to like trade down

fuel that expect mentioned Mike, what basis, continue, of press much can times net to where talk that an on few and you surcharges guidance and in have about elaborate then, given year? a the are. release, into are, a where just was next prices impact fuel And do how the you you can on So as baked

of right. constrained. Brian, a didn't In an lot intercontinental of obviously, trade that, a down for QX, quite see Hey, capacity you're reasons we couple perspective, still as is from

there premium absolutely do. soften, to focused do portfolio. and we economy does continue demand But a more a the need I that will very anticipate have if have bundle, for deferred who be portfolio? our have customers who deferred a are So, need I on for

that our deferred we very And will the we so networks. about attracting about clarify. we look customers rely portfolio, really on maximize helps make [battling] sure that be to as not it of growth, at that value that thoughtful targeted is just Hope [ph] our solely

a there's the fundamental before, a many -- fuel as Brian, overall Yes, has component as construct. it, highlighted aggregate and look, you of it's of pricing elements when Brie

going price we So I in I'm of in as it that out terms assumption there say specific it. terms But not of prices. current that of in fuel to high parse fuel as the one would is have not have, aspect the guidance we

-- a So that more help on for front. that maybe little you is

And our Bascome come will Susquehanna. Majors next question with from

that lot that. understand taking worse would scenarios, economy can for deeper drawdowns seen questions. any would of as and with how you to to in are mind a my a the that you're perform And there we see out love out of potentially there through have I historically versus Thank XX% they Thanks recession? But Yes. and modeling us should investors nuances the your guiding type in to come projections you. you we've business that the or moderate consider whether not walk EPS that in environment. followed discount,

me begin Let or have jump help and me this Mike and here. in Brie

we prepared me levers significant that. we very networks. constrained predictions moving down. come making projections environment from pull to out those for but we just some a let economic already And will may sure today operating of there, And have here, cost yes, in adjust controls we perspective, we Firstly, are some are we are and say that that, prepared that and

to We the demand. flights match will beauty is a up capacities the of the as down. and down just just -- big we're take And flex will that's network we able required, having

have We as that historically well. demonstrated

we But And here. some there's economy. assuming some That's not we're range we have flex not are that recession. of slowdown so on assuming what with, we're outcomes to yes, a a our deep prolonged ready definitely Mike? for deal

and of just across obviously, so, support adjusted, We we you. when the the airplanes. result, Trans frequencies demand. year. economic efforts and air lowered had macro later, Yes, support months back pandemic Pacific some In few then, in our of how and we a or before to backdrop, parameters prior had and by parking more on to significant forward change were completely a And in Bascome, previously policy on we to shifts trade just to get the give shift when commerce, XX%, the pandemic, February XXXX, you the temporarily can as realign we around trade seeing adapted were lift that. pandemic fast that from the instead and Well, to the trying have

than thought that we think certainly, an have two, our us able organization, speed were and all every So, prepared do the so. learning amongst ability historically confidence as faster to I we gives can we at demonstrated and we one in past. the the to are we could and which of we've pandemic, And absolutely adjust networks the react may during the

Cowen. with next question from our Helane And will come you. Thank Becker

Hi, Thanks everybody. much. very

was the two they I this. can questions are this are to continue you other says master hiring can probably how you I announcement here. you this thanks week from for is, but My thinking think question possibly that network? Electric that so an every airline took And retention asked pilot Vehicle BrightDrop. you XXX the and question hiring there And time passenger your about earlier get. The So are before,

think out how wait. talk I sustainability related Can if van That's about And fine. it do to next I efforts? XXXX going can you're and that's week? you So thinking of order. that the CapEx you're the about to

vehicles I on in at first electrification Express. the element pickup investment spoke across our and why increasing vehicles. continuing delivery with earlier board. of is electric that That principal our the Helane, The is about the

committed key pilot the And And Raj XXXX. absolutely the consideration on going by for replacement. means I'll forward. thanks going to is a goals let plan question. that look, but the that address reaching got we're So now get that fully to we

make And Helane. two points. situation, to just wanted thank the Yes, you, yes, pilot

provide part the want I that to work we job pilots tremendous and have in to Firstly, the wanted this people a during our done And have to who of have want a say environment big get FedEx, portal. here. that the of of value no dearth because secondly thank you into to they there's FedEx timeframe,

as we're that that for an not So FedEx. seeing issue

Research. you. And next from Thank Scott Wolfe our with question will Group come

seeing afternoon. maybe in margin or of we Mike, today. not think should you expectation think and And you that QX? focus thanks, and hearing lot bigger see hearing seeing we're ground hear understandably, that more you changes the a there's changes biggest like then But next and you year we're And, at picture be about about Raj. that. for about big the going inflection we for to Hey, week. think do I wondering, talked about year. later next that improvement reductions or big I'm margin things do agree would XX. this just strategic if fiscal week strategic in FedEx that hope, cost And, and it's And

Mike. Scott, first, is this

Yes, for here? have see have it largest margin look, to we Just segments that to the certainly guidance the have case clarify, of within the is ground improvement, to QX. margin all improvement the in we

express focus that a emergence the emergence launched ecommerce we'll week. has years few and definite for the to years. to next delivery. but ground that you story operate the XX next much and packages historically, yes, Scott, market a definitely and me and and day U.S. us both we in services, more now, They're networks on of this services, domestic in actually last away definite today, the of that the opportunity is of lot going give it's talk across different And or And ago different gives you're not over share the networks. week changed time last residential we gained optimize four to the get fantastic just three focused about what tell that, And I'll on collaboratively day years

come And with David our from will Bernstein. next Vernon question

for isn't for want you think want don't about too this I be next and that. many guys to I plans But the good thanks Hey, afternoon, taking it tell know And helpful. to would the of Raj, question. year.

the where where of Outside we have could of kind talk of levels metrics staffing been ground. on those opaque challenge. on all service from stuff the And that too service kind to Difficulty] opinion us today over These service trucks be where to hear data you if would for some kind shippers about to Difficulty] we to could pressure, public are that thing. and great a want continue [Technical was level go labor out are divided expect you be and on impact of much taking the maybe think just are just an operational exactly on little the side. talk bit and activity contractors they there that we service in could on where buildings, of this I we and time in levels situation. of recovery through if because [Technical I'd cost and

David, you're but let little the me question thought I bit, up breaking a heard. answer I that

the now every going and yes, service, I the promise the firstly, differentiation have will service would saw is for And labor where And back this month-over-month a that labor heavily And service we that unwound And relent normal improving think, improved have that from network, This we ago, in our volume time, not to challenges. say, a strong. going inefficiencies our the is the on to to also, to I'm most say year success the and very forward. week. us. I By week-over-week, service. And that be we that away to this of availability had significant here. situation, but peak we glad a conversation focused we've resulted is key started purple our in go challenges network we was the inefficiencies. front, on point

And to goal. and get will that's back so our service the we market leading

with And comes Scott our from Oppenheimer. next question Schneeberger

can, should freight, are year-over-year. kind of everyone what for what has and economy would the quarter you if the basis cycle, cadence industrial where much the of impressive you points for segment, like I of I'm but very question expansion next and here, quarter-over-quarter a do nothing segment, forward Mike we most view question. the week. short maybe this Lance, in my of and the on And LTL margin looking XXX this to the Thanks certainly to seeing been impressive course of being fiscal focus expect XX we over plus for as smallest

should going that year? modeling how into just So the think Thanks. we about

changes I certainly much as expect all improvement LTL the in environment there degree freight you the business the excess of change. its capacity a terms when ago, more from evolved when is go of was transportation years a terms when in margin number said, it greater Scott, pricing cyclical discipline of Look adds capacity is through we then segments. Well, has of in not little demand which our of you have discipline, where a of is a strong,

year from margins, the approach it in great both an confident as there. very to discipline upward of continuing we're drive outstanding within well So taking overall, to from industry the the we're as terms

moving Todd Markets. And on Capital to KeyBanc Fowler with

Hi. Thanks good Great. and evening.

number make So single Brie. slower expectations, that shape back like half comps guess, both half. across I us up wanted Want the versus business? around understand calling thought the then sure the the right. to in move an left side, and was help those number I low Express understand two, ground on I is volume the that volume ability just the sure pieces, call on easier then, sounds is Ground, can how in much to that the and it to that economy one, to and first you got make is the if on business still price I And Thanks. digits

get there. free But ask or didn't miss I Okay. whole feel I'm if try all. question the the to whole going question to again, please it to

number just low have we so we're Okay, first looking I the we was digits, express at XX. were percentage was looked single digit market as at question is we ecommerce XX, think like single still total looking the pre-COVID, when volume. ground last and you secular XX%, perspective, at in about the From between ground saying and retail, growth the still a I a were ecommerce, of the believe low it's the been volume of

then still ground in that So we that From be as Ground back faster in me be FedEx would don't largest that Ground got Express. on the the anybody especially call. believe an opportunity We've get range this for And growth half year. the better. let think is I to reflected do I economy has than economy, this for growing specific surprise perspective. there. comps mentioned our a and Ground

forecast you're economic similar anybody. want from sure current and economy I to And to Raj’s I it QX do there. didn't need I off. we not point. it eyed a And then when planning that recession sweat said environment we're which we And our operating make clear in we'll right our the is now assets. said, confuse in QX. to allows very we're that We're about for that in market, start normalized especially opening my think going remarks to the really Like volumes build economy look a see things us to need product, the to

delivery earlier, to value. need, to that But bundle. the a if of product, anticipate commercial have economy SKU lower have do has they play who do different a ground role. need customers there's products a the needs the really use economy return have I I get line the And have softens, a either a like have to that larger So market we and the majority that home said will vast

to that sure important that really is make there we So to to And have defend. is us. bundle that product

in long And so us this some later answer, volume believe. but see economy I you'll back year, I build think

Stifel. Bruce And come with Chan from our next question will

and everyone in Thanks, operator. Afternoon, for me squeezing thanks here.

now Can back you talked And make growth the discussion. coming in in of you think share? give is terms go? SMB. maybe do you revenue putting share quality from? where that about you. you then of to that, do sense also, can it in SMB stand where happen of come share initiatives to what place Thank think And us want Brie, And I part a to right there? that. commercial BXB Just you're growing Where's

Yes, great question.

perspective, improve market we've share. a to from going got again, business. BXB on our massive a running So we're And a lot

one of going week our working I'll through the is we're that the to guess to world be on, of and I country hear a from kind visibility things a without every about tool. lot try So you're next primary going in specific BXB,

As last critical. proactive visibility customers port honestly, years, is you're can talking about, over that a the managing customers And gone amount the congestion. visibility very help two having change complex chains reroute our of have and a around reroute through supply the around you tools and then weather imagine disruption, to

our BXB excited So navigate our we about lot talked customers, this and helps in really we've FedEx that largest are customers supply platform about, really chain. Ground and particular manage their a

a onto or to healthcare We us intervene cooler. to allow in tool that we this can our customers capabilities intervene service so disruption, and are adding is put for if new a there re-ice something

because really FedEx touch us enthusiastic, something perspective, most intervention do that tools, And about business So then as need I proposition bundle, you're is a I'm running over would business. insights, just data, they if say and somatically value simplicity. to the having small for small Express small customer, the a BXB, From frankly, really giving can over that really the quite just customers no it, your that capabilities the every tell important. small one customers function our you're again, about or in and

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we We're are really very the that interested So and confident being we've business very small of got. disciplined momentum in. on portion we're in the

Research question final Vertical from Jeff with our come And Partners. will Kaufman

really projection looking squeezing in forward Thank to drop for the very Congratulations get number much some you CapEx next here. X.X billion week. time. in from and me Two to to wanted exciting Memphis X.X everyone to here, parts just Mike, one, billion. I clarification

implied of think was that I more chain challenges. issue of timing a you because supply

a want fleet. you that than dramatically question. issues between a assume we not Could in should Sprinter. it's a benefit please? Expo the those comes the lower to toward the BrightDrop P&L XXX savings both and at much secondly, the is on costing had intel the as to the as address got to Helane’s positive and then, maintenance TCO and these But of follow I fiscal fuel chance terms see more in Mercedes we And trucks So was come that vehicle XX? back up million head we actually We've

Jeff. thanks, No, sure. Yes,

let yes, on clarify CapEx. the So me

pace we simply replacement the of there. So, million vehicles with move anticipated. of came just projects chain it the the in timeframes at supply that in couldn't this was indeed, manufacturers delays didn't anticipated the given case get as lower the for some year, because Certain instance, $XXX facility

plus current other will said, and there. that the spending those million I outlined the finish So all year considers the that fiscal X.X out for

have forward But a in carbon maintenance financial initiatives. does economic the lower look case that been on day, perspective and is fewer BrightDrop I X.X this [ph] it's it at and fleet. Obviously, say then on, last guess or we could been lot acquisition electric from lower indeed this so X.X focused so [X.X] vehicles last But So terms of costs going again, this at X.X a would it but year right, you it very the if much last X.X underpinning have too of moving had have the the of our look would key our you're year, parts, this and this end year. been year year, And of forth. year. and

cost So run, we of combustion definitely the ownership believe can total the the vehicle. over long again, exceed that

So again, thanks for the question.

And I'll back session. turn Mickey that the Foster. over question-and-answer the conference does now conclude to

in FedEx. Please additional much. Thank questions earnings your quarter for call team, you Thank FedEx relations Bye. investor the call. participation you on about very conference anyone you to feel Corporation’s if free fourth have

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