FedEx (FDX) 23 Sep 222023 Q1 Earnings call transcript

Good day, everyone and welcome to the FedEx Corporation First Quarter Fiscal Year 2023 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 first quarter earnings conference call.

want planned our issue. due we filed X-K begin, than earlier to we to SEC recognize was Before a technical

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

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

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

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

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

results updated week. pre-announced start good like outlook first we and I’d quarter Mickey to you, last today by Thank everyone. provided acknowledging our and earnings afternoon

actions. confident have the will out and performance not control. swift drive to demand am align cost taken in Getting our why improved last network quarter cost actions rapidly we through week, with outline as priority and today, is the Our But I address our to within as ability profitability capacity what’s communicated progressed. I experienced aggressive we did my

these what final in Before me We the in we volumes accelerated details which discuss in let to quarter, you decline saw last our a first providing weeks. around during briefly June. more the since actions, happened spoke

in the and while system that the the softening the U.S. both we due in volumes was were costs Our in and materialize. predominantly Europe Asia service-related. didn’t volumes economy to shortfall economic had for Therefore,

While operations. of took decline from scale action, we immediately the cost volume savings efforts our the these to lagged due

to being while roughly decline down As our our volumes a up transportation adjusted company all was result, year-over-year. segments. XX% at down driving year-over-year, The year-over-year revenue bottom income translated dynamics volume operating these X% impacted total line directly

lane XX% Europe. hours. between X% our generate $X.X ‘XX daily fiscal costs. about making and as matters will Asia plan most daily network. is I we express $X.X turn, our fiscal to reduction our will frequencies parts: speak global cost reduce and ‘XX fiscal we first, to the year $X.X are actions about permanent. cost daily year year. billion transatlantic in brings each to $X.X and billion will contributor steps speak expect and XX% fiscal which strategy Innovate frequencies, in of Taking cut on this pan-Pacific we and transformation includes I’ll our to be key to changes of it, Express, ‘XX, are what Today, to immediately what to costs; – aggressive optimize and This for this expected Tomorrow reduce in Starting billion of decisive frequencies we single are air of network savings, The $X we drive largest be contributor of second, our to Now actions you Deliver to permanently to prioritizing with FedEx to our flight billion me doing at X billion savings in reduce the

in volumes making be and continued changes the these October, the began actions year. the realized benefit As will in fully later increase of of quarter, changes these network. we deteriorated throughout initial structural will The to impact our our steadily fiscal

We are peak. other rentals reductions implemented routes, additional also steps taking to Further, post expenses. to reducing hours, ground efficiency, vehicle be enhance our evaluating and we’re including on-road

are the to For productivity, approximately a we routes example, Europe, ground improve in XX% leading XX% Germany. of in reduction UK network in of to and altering routes

FedEx Now be to $XXX turning in million ‘XX. $XXX expect Ground Ground, in to fiscal savings to we million

around our cutting primarily in to Ground rationalizing costs operations. approach centers Our

nearly costs have Sunday network ground select operations we’re We are stations. XXX least reduce will plans at components which shortly. will sorts, over service and right-size plans planned expected as projects. details week, we office XXX our And facilities. mentioned reducing actions locations in office also expenses as capacity cost fiscal Mike our These ‘XX from The while maintaining more overhead on will provide close X final capital include consolidating canceled our of and several our FedEx last savings be structure. corporate to overall

these fiscal Services expect another all the $XXX FedEx realized in second the with million $XXX contribute services, in QX reduction realized In million year. will We ‘XX in has approximately actions projects. stopped including during the $XXX FedEx of million non-critical to half savings of $XXX nearly QX actions, Additionally, overhead and total, the savings remainder cost million. our from

The that second a have reductions, Innovate program in Today, is on execute June. cost Deliver DRIVE our and Tomorrow launched strategy how permanent part of for DRIVE, introduced is focused we our on supporting strategy. plan we

related reporting DRIVE directly are year additional XXXX. to DRIVE take facilitate incremental be X.X, the program an to reductions cost additional strategy. X.X, near-term and changes and our can by network. implementing long-term appointed of I our ultimately Network optimization against will started upon we the trend for execute These to and newly Sriram this expect I’d Krishnasamy, Chief Transformation our team already clear, savings our $X continue $X In their to Officer, Promise. long-term on me. has under To our just Network will thank end-to-end to as we hard over the costs an will the total, focused billion create in fiscal out benefit for enable billion this team fiscal deliver Our we sincerely closing, In to transformational performance long ‘XX term. outlined. actions foundation the which Purple will stabilize lay we dedication highly motivated control these and work are like

in to Customer over it turn underpin more detail. to market me Carere, outlook strategy let trends our Chief Officer, Brie commercial discuss our and some our that Now

afternoon, Thank you, everyone. and good

decelerated, trade and certainly quarter during than in spending and Raj the the we As particularly discussed, late manufacturing, first quarter, more anticipated. global consumer

As we volumes forecasted. our were quarter a result, first lower than

inventory The by GDP Our increased series. over X.X% towards fact current about now From fastest are XXXX production X.X% ‘XX auto, consumption that excluding expectations in June, and have U.S. to services, Data growing inventory gain Further, ratio, Recession. consumer real XXX respectively in skewed for and October July and basis through down June. the recovered demonstrated ‘XX year-over-year that June, forecasts challenge. Great since decline points Also, XX-year period XX.X% to fully spending is by has basis inflation of U.S. have which to are retail U.S. declined the X-month shows to industrial including slowed remains growth pre-pandemic the ratio its level. the points, sales, real sales auto, calendar the pacing a to since after was the year and XX real the an retail excluding history in automotive, sales worst as

with dynamics on like businesses, transportation weakness. spend I’d our in the our Asia, impacted specifically most and moment Europe. were to to Starting by occurring and a results FedEx Express Turning within macroeconomic Asia

and fell lower year-over-year, indicator pressure anticipated of is changed flat. had we our recent consistent to results. and our air the in region. to July, which how higher ocean spot had rates A is review Shanghai. year-over-year, In and early were the out Through Hong June good rates of spot by and with latest Our and with month, economy than Hong demand XX% further small Kong market, were gains single rates was In quickly In of the Europe, the and respectively. is service rates end weeks. we between August, Asia digits, to freight the under have these coming XX% share available, the in XX% broader market in pressured decline June, while market the weaker Shanghai data plummeted a Asia Kong rates

quarter, Our two levels scale. and it to our network momentum integration but is to to Throughout of continued in refine service this March, we an was improve completed operating European division. our procedures effort successfully the individual complicated across incredibly networks standard create combine

anticipated, has increases mix. we fuel proof and the transit growth was capability. driven by Despite levels, United strong FedEx being yields held lower best-in-market volumes FedEx an than to new base Ground revenue share delivery now surcharges, market from service volume of exciting States. improved rate in Moving Ground, have higher times and picture higher

We deliver peak. are ready to for

We the in peak to trends. strong team team focused monitor Freight The at profitable And FedEx revenue surcharges revenue to network to of build. balance will on momentum and share delivered disciplined drive remain Freight, volume growth. capacity demand quarter The growth. execution, continues leveraging nimble as XX% we and our another marked quality continues by

For strategy execute attractive revenue provides the that yields. company quality continue business to pursue and overall, we our

taken to well capabilities, the as recent to stay We approach we’ve peak. continue market relative deliver and we new pricing actions positioned to

pace brisk to repricing January for announced pressures the increase a general continue coming response to negotiate this contracts maintained for our inflationary costs. rate a and increases. have strong our X.X% We just We renewals on in

surcharges that Middle relative Asia, United adjustments rigorously Europe to August, surcharge and to as pricing the area remote January. the will are monitor new East surcharge well Africa. our important implemented international we we and fuel new Fuel pricing announced Europe, market. fuel also an prices a In peak table ensure for and We In Asia, States. as tool. in residential appropriately We the are we positioned surcharge handling launch

model speed We’re today’s moving business for environment. agility and reposition operating our with to

As we opportunity have Raj, a you levels. heard great align with we volume – great costs had to a from

delivering commercial while customers. to We doing are for committed this strategy against our executing our and

value it is have on Officer, Financial we still in have we’re dynamic Mike and, our proposition. driving fantastic during to customer with environment, the longer-term delivering and outstanding am opportunity upcoming to quality pleased strong really With Service I’ll how and segments, this we in focused teams a an Chief growing responded course, experience. that, over our well high-value improved Importantly, of peak Lenz. turn positioned service are the season. I deliver

Thank you, Brie.

Express, higher including an increased While freight X% yield, revenue and quarter, daily on with were actions, income basis challenged income factors cost and adjusted operating for XX% due points operating average basis, down grew At and year-over-year. fuel down adjusted lagged year-over-year. partially operating XXX including Package margin declined reductions the expenses adjusted was up was profitability volume surcharges. yield package XX% offset fuel, lower by These declines. as volume to management XX%

yield yield Ground, expenses. offset X%, strong including and to delivered XX% factors Yield actions, out primarily by surcharges, other surcharges. focused shipment driven XX%. delivery within Turning increased salaries the were lower over increased changed and Freight costs quarter and what’s operating on as higher operating moving income expenses, by Yield, with by growth. higher with to as operating transportation we’re improvement volume home XX% was management as network. year-over-year. environment, driven and grew control due This offset partially income to These team the To fuel including address the operating to purchase partially grew the another employee volumes. This by Freight fuel take benefits urgency increasing of continues higher our including well was execute.

where change billion targeting for we’re ‘XX The identify accelerate operating and is initial fiscal The pronounced. opportunities has most billion at plans been speed are into team this $X.X $X.X demand to year’s from the will implementation. Express come relative year. majority our of to savings savings Our to cost-saving heading the

which cost June, flexing to optimize about in to These We expect back Today, reduction directly fiscal with Innovate related These how build our of differently billion our to back with with not a nature, and about we view in permanent office ‘XX be structurally future. permanent the changed reductions were reductions Deliver are as along is environment $X Tomorrow slight strategy costs. for we a in corporate of part shared the networks. the in savings component largest

committed to mentioned, improvement meeting. our we we at June investors Raj profit remain the As shared objectives

the We DRIVE initiatives, identify implement to accelerate opportunities under track and incremental have to launched progress efforts metrics program.

efficiencies Europe, $X.X come billion lastly, of come from from approximately shared billion led of have harmonizing $X.X restructuring will are self-service So largest shared billion modernization, productivity expenses. the from billion next, line discussed next, first, DRIVE. via clearance utilization procurement of line deployment and operating commercial we details About to Four infrastructure lower improve previously; opportunity of are: the sort, by and efficiencies total ‘XX enabled by global and design and cost. advancing allocated reduced efficiently we and haul and haul total liability efficiency, more on operating Express processes driving crews, savings give deploying air more of optimization areas network and savings, haul; And back-office fiscal expenses costs. as of of About overhead Ground the will automation FedEx I’ll and actively further FedEx to functions. next, service consolidation and $X on-road and surface network by routes targeted by reducing expenses will line service; aircraft the $X.X come increased initiatives, the asset digital dock

capital spend for $X.X for billion our XXXX $X.X to our plans, compared have Moving we to to capital our forecast forecast. fiscal billion spending reduced prior

We allocating attractive to are the intensely most initiatives. focused ROIC capital on

Our return billion liquidity And in liquidity, committed in capital our remains we our to including of stock billion cash. flows strategy, a with plan we as on cash repurchase source $X.X remain ended our and based $X.X the strength to XXXX. fiscal of quarter

expect We $X second in quarter. billion purchase the to

despite return our the in Our business strategy we’re navigating. confidence capital currently our reflects headwinds

resilient and flexibility maintain significant have balanced We sheet. preserve to capital our allocation a balance

in Now we turning second second conditions quarter. cost guidance, quarter challenging reduction remain aggressive business to continue while the we actions, to to expect drive

and update of with week, $X.XX $XX.X of quarter. in consistent billion the provided to between fiscal currently and adjusted excluding last business and costs related or second the we optimization $XX result in quarter, greater realignment revenue share, a expecting As per billion initiatives the earnings to second

remain the uncertainties, of based For major trends current in our is while we not the in our June. weak for year, the and you on guidance, driving fiscal and across for for are margin plan our year. our an to fiscal that improvement, late we quarter with the on QX geographies. invested is our guidance in committed given shared capital we This the that remainder persist saw return providing we capital term, second intensity takeout cost expectation initiatives embedded XXXX targets operating Longer will

that, growth remaining presented it pressures financial and moving goals. you that challenges, creating while value questions. The focused more leaning reduced start by but on Session capital to into get prioritizing quality, can your revenue these cost address And are up long-term expanding margins of elevating We the will open heavily year returns to I with actions urgency and to for assure those through are intensity. we with greater-than-expected Question-and-Answer profitable we

from And Instructions] go question first take UBS. [Operator Tom Wadewitz we ahead. will with Please our

sorting guess, of biggest it the taking parking out give to Wanted on see you just us I is and labor Yes. of I but have could market Good actions perspective a some back. and to might in it’s like, seems prior maybe the rationalizing kind of afternoon. you you some done the if markets, guess, new like more take execution, on perhaps seems centers tougher Ground. And your the need you reduction cost if something maybe thing confidence think level a planes capacity labor downturns, it in little

visibility your and through? maybe detail come see to wanted just I you. you give how on they to bit more a of kind actions cost if could So those Thank

This Tom. Sure, Mike. is

order are air down magnitude of the the So observing is network. the that you reductions from cost in correct biggest of flexing

into reductions November. come into the move October of year into will the flight effect through particularly – in as the for half we and take as So, play, second that the

you that and Ground, rationalization. volumes spoke What for factor line and does have. because you us load at that the are more thus, fell down of for you below facility you haul down expectations as haul, volume line sort leads is inefficient So so running need the is than to

that’s and Ground optimize just canceled and of sorts to lower a deferred spending the within consolidating we we planned example by literally actually that how projections, facilities we I the also initiate. of highlight few about are number that volume. we facilities, a So have rationalizing against an can capital

this realize the moving on are there. we and potential So quickly acting full to fully

we get So these. all plans clear have to of at

and a add very the execution. on is all team focused list We to solid have long a and they up number

We will with take Brian our next Ossenbeck question go from JPMorgan. ahead. Please

favor Maybe at a about hi. why just a are nearly point have this FedEx at seem their question. you this things not – time? of peers Yes, in more can reason only Raj, like least all sound pretty called as basic highlighted. I haven’t guess They this issue talk as in least at the just working out? you actually is well to Why falloff the much

So why can about of a And Express quickly all week downdraft maybe in you the costs, can us stats it terms talk shaping the significant to waited which because give of how fell September for? are some and that just you recent you we address up? in how just just and waiting then is

Okay.

and Let start talk control. the not seeing is the take the comment the what All going will end things the that that trends do. the are do of some day, ahead let very what marketplace you at want actions. trends we this. to economic again, cost can competition saying. don’t that get the And on I aggressive we Listen, about of our is can activities that at And will of It’s are the we ebb being macro I are it control it day seeing. that’s environment, in we the can do why on to whole the will and me listen, we we the say out Brie to we what the or and really And our control – seeing and then of end can’t we is of matters flow. want

We we focus side. we will can on revenue issues control the will the that about trends. cost I will let just the – primarily talk Brie on in

had know this Brian, we three kind market the things reiterate we Thanks, and kind trend at we trend. I that Asia-Pacific, absolutely just into opening FedEx but we a did of In break really comments, of believe to a – background, look Raj. we a is of categories. what when not lot

are and our little how believe quickly similar share we is why gained that indicator, June, I economic market expected. And however, actually from June, through as the rates experiencing as shared they story and in actually Asia. do in the some have from United perspective, region, here market we actually we there about quarter. Asia-Pacific in mentioned, In We We, studies, I momentum in market the issue. acknowledged, throughout lagging did service a do good the can And Raj share. As our economy mentioned we bit market changed working mentioned, improvement an And of feel States, in service we but seriously quarter we through see saw a think so that had the have that that was share. held spot market August. improvement. it those then I a worse not the as we plateau we in the service levels, that FedEx are Europe, on the got that entire we in see And that’s

within a seen That persist domestic throughout from volume the perspective, quarter. conscious the is that have I a have we we and look go. FedEx of one the kind prioritized have performance was and would perspective, quality that so nuance Ground actually very you economy that from nuance some we let If revenue say

we the QX, in right macroeconomic So then say revenue entire perspective. a range. would September we and have for overall, And range that think is what from I you the experiencing market got that had do that is

Please We will go question next Oglenski Barclays. take our from with Brandon ahead.

there cost team. past this that company about are improvement Hey, plans but and taking just because of going new questions. definitely delivered. plenty has this appreciate And plans, cost maybe haven’t my at wrong for we in all the Thanks Raj way, the been the

your pointed customer is as here have driving XX TNT like review, Ground relative working the what a disaster network I a question? have looking in coining outside lower you just certain Have the can Is and unmitigated losses that Express just because delivery So, Express from I different product your done And a been guys has seems dynamics. there you or or pickup And to ask Ground product I not I isn’t to can networks, a that competitor? profitability know out are again. perspective years that’s working? region tell last in it. dual get from well then an been and delivering, in, and European that you our

efficiency unionized, asset your I if your of is add. literally is might competitor, However, that half nearest which

the use I network regions deficiencies downturn put in permanent address see markets So can in concrete direction. But aren’t I a guess, more guess the the not to in billion obviously right the you place plans that as why exit or $X you and in them? this out, to step working costs how

you, thank Brandon. Well,

we committed think cost taking levers to fully out. absolutely I are

about cost year three billion buckets: the have ‘XX, take-out – We that billion to talked in $X.X for $X.X here. with fiscal

X.X in $X $X We then that. ‘XX between billion of and are after talking ‘XX about the billion and Network

numbers. significant are those So

confident We these are numbers. in

with We targets. domains have identified

in who we as using speak business. people technology cutting-edge on already focused are possible. motion and of quickly people And And live we on business all have as of focusing it We and to this transform value the some on as deliver is coming run is here. are the

and So definitely the the we committed, is are confident, this team. we entire focus of are

of history to that is that the has it’s it them. took a Europe been that and TNT had had back in – that a portfolio look little business a – business has There our since far profitable important you As and here. is very competition Europe We XXXX gap. in we go since concerned, you for asked question, at fill portfolio gap and got – bit to as

are No, the that the exactly way foot. is we in had – complete, is we kinds had of we But the and now it unmatched had that’s getting part had integration to in things getting on the sell gone in And have issues we thought of sales better. COVID we would? the cyber-attack, the and service the our integration – all has portfolio the done. We Europe middle. because front is it Now

So this call, numbers, complexity at X technology that. of yes, have a you than are from X.X, we next to the that us put is most going technology And deliver is way, by years. in-network we over issues greater. will perspective, building facilities – of or And that’s confident But starting a great. of is importantly, if for get $X And improvements far can easier from the on and that’s efficiencies point, perspective, relatively say and other Network would why X look again, the it enable yes, that Europe the billion we’re we X.X. a get Network the it’s us the very together to to the issue of easy

right it’s think sequence. we So a

We our Sachs. question next take will Alliger Goldman go ahead. Please with from Jordan

what Yes. had in the of Hi, in more How the sharp this protect sort with magnitude you’ve it catch off-guard? curious, Express was And heads-up did could against you would coming. that have get might different that had, how decelerated. a so do of drop-off is the thought that the I you guess future? have just that in But contractual deceleration you I so you you, of done question and quarter. I’m I of the have volumes light like for customers

So that. talk maybe you. you to Thank could

the maybe quarter. off up the talk customers. the you But Let talk about to about timing towards and did on Brie, quite the the if me about volume want then of what’s drop – suddenly end add

we reducing And line between have system take all a constituencies know, time network. actions And the can you is. complex around haul that. that’s the with multiple we which it is on As a form there lag

said, So full as will those October, in see of I takedowns. the benefit you

anything customer don’t want Brie, add to In I if terms of know, you more? trends,

in that our here customers actually from say United And August, customers will Yes. experienced, our their perspective, demand a in sticky. what What is their two is incredibly and especially the and missed there both is I customer States things, in we are wasn’t forecasts. own Asia

is help from So from this perspective, customer we a I with their their share demand loss a – they own a working their business, of not are furiously them within difficulties experiencing absolutely the in customer a to reduction are manage stickiness them implication. But think own relationship that business. perspective,

Jordan, Yes, Mike. this is

also on costs We are the shortening identifying of very reduction the focused span and variable time there. we realize intently can which these

is So intently we of nature different continuum and of there lines across business a on span but again, and are costs, that focused shortening horizon.

We will ahead. Cowen. go Helane Please question take our from Becker next with

very much, Thanks operator. Hi, team.

that should your impacted you’re could that ground going are of the to of to the wondering more you that parking just be to like are change and specific or delivery and lanes Boeing So kind on number this think about flights on aircraft the be how if trade reducing we going you aircraft get to maybe do be schedule? $X.X number, billionish

lanes trade the aircraft. to go hit first me we let – will and I’ll then

frequencies, down – have we at will the we how And Trans-Pacific daily happen needs what it of frequencies sold. of daily the we volume and X% in will daily XX% Mike? frequencies of and post depending XX% continue lane taken think and Asia upon transatlantic will I Europe. to we’ve peak, we to look between see

Yes, the we is in maintaining Helane. and In lift. there but connectivity taking lower need that network less volume so down, service we’re

just demonstrated idling past, temporarily. park identified we opportunity of a to will – to as the what the the need result, have we So in equivalent we be about the as aircraft, eight is narrow-bodies

costs you that maintenance And of had. course, defers appreciate, can that you we would as spending so have not And of the flying. otherwise save operating

continue approach that take to conditions So we how unfold. for will

will our Wetherbee Please take from Chris go with next question Citi. We ahead.

process I the to Good particularly guess afternoon. cost-outs, year. of the understand I wanted this

that guys fiscal of second in $XXX So another or to in be realized the million mentioned realized think cost quarter. is you savings the I quarter, first expected million is $XXX

that level year, so over results about the ago. about are a so or XX% that’s at a what is we full So just expected the yet or half of week running

quarter So rate with of costs $XXX the of be savings the total billion struggling, that. to the the of is this into expect as improvement? of the just the should EBIT bit I a I’m we company, year there Or billion $X billion guess run is may relative to extra particularly for neighborhood the little half coming of million in $X.X or cost we second $X.X that which move kind back with north of with in?

Okay, Mike. Chris, so is this

in that Let me parts. two take

second about quarter asked you in that. First, the

So to saw in late in while expect in the occurred latter full cost the you change savings of also as the we as in all highlight, of the will we through persist we emphasize, of we step demand more QX, or have downturn months X that QX accelerated as of QX. And QX. demand we trends those we’ve realize in part that

that margins. certainly pressures So QX

As we the we through we year, through be the relative go that go year. – expect go mitigate as as will and we savings then build through less the pressures the QX to

of our ahead. We Ken next go Please question will take from America. with Bank Hoexter

Hey, great. Good afternoon.

understand out. of to how conference about launch versus to But do question, to Just we Ground call. Obviously, Q&A your festering just chose on try a it. that message the what understand the like with chose issues I why getting route CNBC I message want issue? in before expect understand hosting philosophy I seems and to going you question had my purchase get you wanted just of why can to how a solve contractor scaling. is, to It transportation plan cost today, the you but technical forward talked you the you distributing you just

you’ve some pulled in networks. mentioned your statements, You

Some I don’t opportunity concern. seems to change is there seem this, there there, contractors issues turned savings Is whether structure in. It routes to cost these that to really like have their the to of use deep or know some Thanks. have. the the resolve something,

is this Hi, Ken, Mike.

and it how felt it going was plans. to use about to That’s and, time as your relates future to that so circumstances. with we’re consistent more our quite to the today us First, appropriate allowed prerelease, frankly, question be talking the address practices we market about for

the first service is well have And Ground we assure let very As the at where put issues peak. all, that now contractors, peak of far me on levels perspective, are as just last you, pre-pandemic levels are X,XXX Ground perceived program. reached this that FedEx the we side, signed for them of ahead in have were running positioned to XX% year. we of incentive The and the

were of have are team. support for issue a well much we So the all and our media. we more in of positioned than peak the perception They those a reality, and lot from are

Mehrotra Please Amit Bank. We our next ahead. will from go question with Deutsche take

$X.X you cost this Hi, on lot I a billion wanted cost if it’s ask not obviously, sound net, year billion, $XX Mike, Because or has savings. company but cost-out the number. gross Thanks. that to may everyone. If structure. and the have billion it like about a the a if initiatives $X.X just it’s X% of to wipes out inflation it number, the entirety net

if fiscal of or are well? you that’s that you. they answer characterizing know the you And second very think to are from in down Express going it. then up want how a here, quarter Thank from So that going way or if just as unfair simply, profits about here fair can just I

we the coming we the billion as first, our is plans Amit, So to $X.X cost to relative $X.X billion said, into had that year.

as the and cost on is the I increase. levels you base unprecedented experiencing everybody would the you basis, else that for of so inflation, observed, world, we, rightfully is largest is of costs. I quarter absolute first Now way an characterize our absolute year-over-year in impacts guess best absolutely the as the it

move mitigate as down I’m was question? that will offset the the cost sorry, road. what will year, the initiatives second and traction here, cost As take that the inflation the through we

just offsets Well, going a are line. way cost decline even the they answer that. you the giving just or And like quarter? the first on now, drops the of is you’re then if takeout, it second in were the question was growth inflation basically characterized second there just seems if or in if just down me profits, are still going no all to then bottom we prospectively the – chance follow-up quarter, they just the are profits the revenue X.X% fiscal from to the where up Express going And up margin absolute

you – if with or agree And so you how I you about understand that. just how to wanted that think

of taking. to actions the we’re No, line the because bottom it wouldn’t drop

to environment. We’re reducing to costs adjust lower demand a

So we at outlined the it’s in June, the we through mitigating significantly certainly that expectations doesn’t while year. that that leave us – we highlighted we’re case that the that as go

particularly in Asia Europe and As I Pacific, earlier, occurred in – I late demand it in highlighted relates QX. as would Express, to downturn, the

will be as initiatives in hold at will at gain we QX move QX. pressure, – margin the Express we dissimilar what Express, to experienced through But QX. see really again, not So we structural

because about timing you the the Express big year of as elements think just of move there. we more So cost-outs, overall through the as the has

next our question with Please take from Jack go will ahead. Atkins Stephens. We

Okay. you question. my for taking Thank

right committee. is a in of future? I lead like feel do the you outside a guess, got So team, comment going into the senior back Raj, the talent earlier to executive senior to about you’ve team place made the lack There you FedEx on clear

Your benefited over largest sort and improved competitor some talent sense X think the you bringing really FedEx missing to it like put here. profitability so last or the of would It element look as really in Do best you that do has practices help a some outside make and to drive that’s for years. story seems returns? forward from in to

a of the think team very There have. I we is I’m lot very, in here. that Jack, experience confident

at very at good they of confident We We very this look team, not worse are have place. very, of talent. several company, external that deliver. already all. players talent we areas The several brought team on Obviously, that an so in Jack, have very I’m that It’s very, we we a is can excited. and will external just new

from Jon Chappell We will question Please next our take with ISI. ahead. go Evercore

is forward? X you integration Thank confident the of is that TNT. about cutting that some in the of cost you of those finality all months to the that service I you issues regions, you are service want behind a the now you? Are And Brie, across exacerbate is cutting We’re then risk thing challenges cost going the could issues Europe? the there afternoon. about to you. think strictly referenced. make final service that past Good I just sure, ask want

At Great we these FedEx, are The and service. emphasize one a question. first. about our of enough second management hand, airline. Europe, are mentioned, in continue lot quality-driven completely And and And going I And is service March. in and in we was talk cannot service we and that challenges not. e-commerce. things season in reduce successfully confident we hand teams into aligned we are core let successful. the move the very complicated of is integrated our more. cost we to to very the did about was here me for the that part Raj as When that integration margin head as service things answer improve service Ground the answer absolutely airline actually will at peak costs talking We suffer the some It are

markets, get really offerings, it’s And July be expect we in when strong. really, we into France As deferred what UK market, And was improvement to domestic a in had in that get we or Europe continued from domestic service across And international we specific. about we the our in actually we the talk about want March market like Europe front we improvement. when August. I stood that then June, really service did strong. talk service the plateau Europe, and that is in improvement When on absolutely experienced of We point. you

elevate yes, to and that is kind within reduce kind perspective. And her number team will service of one there. of our in you have But forward. And what Europe, entire and our I just business and service. we’re Karen service continue at absolutely, our improve knows, to We that focus overnight confident that improve from wanted looking am the cost background I to and give team moving at of where a we’re

Ravi with Stanley. Please take our We Morgan will next go Shanker question from ahead.

Thanks. everyone. Good afternoon,

the going through you double rate exacerbate GRI history in decline? announced, digits? reconcile regarding biggest at that you volumes do are the to mean, a time falling your when pushing isn’t how I your So increase volume

Fair question.

by increase the the think X.X% Last the and in we have inflation. I commercial insight incredible pricing have discipline in post, market is team the our we are just the just way, answer had best-in-class. and tools an year, a into

the the was was increases So X.X%. year, year’s had appropriate we and did we throughout X.X% last that incredibly year, sticky. so a continued for We cost It felt this GRI.

this balance looking the right perspective. the levels increase backdrop, right for constantly we and given thought get stickiness. yield that post-implementation sure But monitor yes, utilization volume to was the and will We the And course, of we’re year. a the from inflationary we make the volume

Ari take Rosa Suisse. Please from with question our will We go next ahead. Credit

Great. Thanks.

as now at So Raj, look the Freight, of Express. producing almost income I it’s FedEx Xx operating

see strength at starts that it possible the gains the you to units? to of performance starting you might we eat downturn? we could how head some then think from you to Freight sustainability potential see into other of on if that about about extent, particularly is the cost Just wane, some the the maybe as side, talk savings Freight a what the at of into And

for question. Ari, you, Thank that Yes.

our side. last went And Freight point fantastic and the when the cost results. margins actually, when managing focused generate a made of job – as quality say, our efficiency. and you FedEx done of to a our expanded. we downturn, important is that were of First – all, because – we through a revenue just synergies change, there do very is downturn, quality our The that the great revenue have significant phenomenal operating me even continue they but much to we on and also team form efficiency on also let has And to portfolio piece provide both

so executing are very plan. we and this And area disciplined we are in the

have will to market the watch We change. how conditions

done margins can gone fantastic yet up. a expect going volumes do Our have as has them I have and forward. have and job the see, declined, that actually, the team And you to

Stifel. next take our ahead. We from will with Chan Bruce Please question go

European missed of to attrition? Yes. And if service those clear how follow-up, by that and that to come want but give Thanks, your Was can I really how so, volume-related think if some color can it much to you. just Raj, us you And bluntly. just you me shortfall it, exactly just comments the issues? from it you back issues? have was service what operator. some a I guess, maybe on and not Thank it’s means. Brie, mean customer miss, of much When ask the maybe I was go earlier back? might what about

at we the with of answer the kind about within Express, Europe, specifically when expect service two I is we tell miss, a perspective, it and we’re believe European you there time-definite And is into when miss that on the So really was that mark things. macroeconomic From that hitting are what of split a talked macroeconomic. of at issue. across we FedEx. majority it Europe, service Express will the Asia was that not portfolio we the you when about say between entirely largest talking volume then decline. service our get predominantly We was We the short network was about think vast macroeconomic. the the being issues, is level

our increase customer will participating looking wants indications And so customers team base tell we you had have Europe. FedEx for that this What sales the need is in that in And to we us strong that absolutely service of I are commitment market. there. their in kind and portfolio

Europe. United the globals as We have their in of portfolio they great States, us here relationships part with in want and large

very So Europe. optimistic about in I’m the future

next Please will Majors with ahead. go take question from Bascome We Susquehanna. our

lot of Raj, you’ve at through a change managed XXXX. since FedEx

X war as the and cyclical look it and the from a in there Thank cyber-attack, Just you. those trade success if back and customers from back FedEx mistakes to call learn change and mention your years? that But a the founder you TNT on your to when the next for to to years set whatever so, what management few make? And reflect, mistakes here. we’re acquisition, going any up can X we did step leadership over you the reversal the pandemic, shareholders downturn a in are

second. think question. this for just me about excellent think let I Bascome, a Well, And that’s an

you of from back of came at be the XXXX and more is growth the the we BXB. of for space. not look see And years we’re frame, look almost, XX% and the ahead was BXB when growth but thought to You e-commerce. going than e-commerce you see, we the XX% now look in X primarily that XX% market, XXX% time Well, next

portfolio expanded we a in e-commerce So way and expanded our operations. actually big our

did of frame. very the proud of time this in work portfolio we We’re services creating in this

in important world ours the most the history especially was one network where We care the time and company, also like by and operating world of around work in especially around of did circumstances. the a Express great the the health delivering vaccines of extraordinarily complex pandemic, with changing the with

executed for So I’m team proud of that. the having extremely

So this about. timeframe is the we’re talking

you, side So to what an have be we absorbed ‘XX course, us. fiscal EPS anticipate, perspective. this not of really got year we we that was the was now dealing of of costs capacity build had need. we’re with than had more from inflation and to And But us situation, that we with the then, now year. lot house. we perfectly from that capacity in of we tremendous with and a did even what And squarely last the honest results And inflation tremendous costs that, hit

So a you how could it. that little don’t I better? we half calculate building. have timed like a It’s know to can’t you’re build going

focusing meeting, investor now a on control. is it out are we – just we have we as it’s So the – things we laid the in position at to are

now economic We capital margins, forget that second. on upturn our intensive. of a what about ROIC for of or to going are improve again, And That’s and focus downturn, this is do. the improvement – we’re our – improvement

control. things that to are us we why cost Let’s that’s focus that’s focus going this tremendous on targets. we talking and about, structural And these the get to costs can the

ahead. Capital We KeyBanc will Todd take Fowler question go with next our from Markets. Please

Thanks and great. Hi, good evening.

into it that So I do Or kind And were you into I thinking the August? that’s see then we sure of in the the or want August, understand how about you underlying of macro trends we typically from some deceleration kind run follow are geographic that we have going quarter? price saw Asia lastly, is seen now is in and further you of And the that the U.S. comes that, assumptions. where then second is there to the just a in expect risk just rate contagion it? weakness make or then piece that Mike, there volume.

on that? And that follows yield so front price volumes there is as Thanks. risk a the slow, that after

Okay, Todd.

August year, actions in So through and demand react that using we basic levels rest to we’re are will of that so continue that accordingly the underlying taking that that. we late the yes, is to the the planning experienced assumptions

ball now. in if be will things in cost quickly assumption contagion decisively. operating are can But further need I the the we we the have assured, focus reductions that. to a control. going we don’t and that’s So continuing about And rest structure, we adjustments and crystal move to make to on

We will from take Research Jeff with go our Kauffman Vertical question Partners. next Please ahead.

running to reduce they through be? that I million the kind they costs office Or to costs in going other? or offices. quarter? routes costs shut ask $XXX that know thank on much sorts corporate you How through you guys the incremental you money during and other costs or for those wanted million have or higher And It to operating for consolidate about was estimate P&L pilots are well. Thank furloughing of much. than ago. the that the I overhead guidance very because you’re the if don’t reducing park $XXX It cost and Where down of corporate where are saw planes Do any and just hours. going the income those savings you’re be? I to year as going money I noticed regular was a are to part

Jeff, yes.

into specifically can reserve just We Logistics. $XX two pieces. million, had at we customer me FedEx it million specific booked Let that address for bad debt a put you $XXX the

we we adjusted is in our legal then separate there appropriate in pursuing line. realignment out And of while action, also this in it while reserve are at point terms so it was corporate/other earnings, the that million And is to time. our take of $XX business

other – that anything were no far context clarify was for the To maybe So more there. to or specific asking as about. any gives items that charges you as a what’s little

the of also even is That’s And no furlough thing. there pilots. a not

We from will go take ahead. our next Vernon with question David Bernstein. Please

Hey, afternoon. good

profitability. on gets targets that – a appreciate right any to the you weeks in or have something margin at saves earnings saves, ago, are $XXs. shifted power added those as there XX low does but of of the just a cost Is EPS XX% from billion that book we of difficult market the the actually color now as kind kind for were what’s level? back reductions looking baseline, extra So we number to of happening low those pushing $XX to going result And I cost the just think to $X in out?

than recognize it external expected. I more frame think, has we David, is changed the way the that fully to that environment we

case absolutely emphasis So reductions. will we’re intensity focused that greater a but put on improvement, cost lowering capital the on delivering the the margin we highlighted, it’s the that be

and the specific place plans initiatives have we And go today. goals here that the highlighting of outlined. we after realize that we’re to and in what that’s as so And that supportive

We go Jairam Please from will question take our with Daiwa. next Nathan ahead.

Hi, the thanks for question. taking

expenses for for sort to Are of just – wanted I clarify. cost account we any anything there So should that cash or any savings? these restructuring

cost the that. there ‘XX, to So associated nothing we’ve clarify, identified for is FY savings that no, with for

a is optimization charge longer over time a number that, cost the initiatives, is be we previously, over business talked Now but near-term as billion no But we years, scoped horizon. could special of $X the that about potentially the range in that there initiatives broader for that.

time, for the Q&A additional this or conference session. will turn of question-and-answer End remarks. any Raj today’s to concludes Subramaniam At closing That I back

closing, the components are actions on today, targets long-term for for real thank The it a FedEx. it you make I’m to your was that we achieve will. FedEx your challenging Well, our a moment just is tomorrow. and and let for in and in key critical path better for interest Thank much. quarter. time in This taking goes stronger thank very are confident you you to And a time very FedEx without saying, me say, execute we

today’s This for you participation. Thank your call. concludes

You disconnect. may now