FedEx (FDX) 21 Dec 222023 Q2 Earnings call transcript

Good day, everyone, and welcome to today's FedEx Corporation Second Quarter Fiscal 2023 Earnings Call. Today's call is being recorded. And now at this time, I would like to turn the call over to Mickey Foster, Vice President of FedEx Investor Relations. Please go ahead.

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

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

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

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

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

and Lenz, and Carere, today President call Vice Executive the on Subramanian, CFO; and Customer and us Raj Brie Officer. Chief Executive Joining President CEO; President and are Mike Vice

by remain passed battle to FedEx at greatly Investor brain his Elizabeth I'd at after He our the XX, will And investment missed. be to Elizabeth alike. at like and courageous has cancer. she Jeff's colleague, the Separately, hearts Investor quarter. the immeasurable, retirement to and loss. share heavy like our of I'd away missed years take to Allen of we Before moment congratulate a to Relations were XX end our views after remember Jeff November been who Relations will and the on and team FedEx. FedEx contributions Raj his the Smith, begin, on month the on instrumental be colleagues now team, upcoming her community will

Mickey, afternoon, you, Thank and everyone. good

network the Today, and by begin as me who there peak and saw the XXX,XXX global our At strong actions to we and nimbler, working than against to actions. team. our structurally more plan on program. season provide network cost another efficient, I'm excellent cost our thanking environment to the Tomorrow while season Let earnings results with QX more work quarter, our by will detail declining are and cost determination challenged. second we more end be be is time, more accelerate those to the done. and trends to supported The softened our we at same in transform remained faster the further DRIVE moving we transform shared our for Today, ever even leaner extremely sustain and of demand customers. goals our exceeded our strategy. by the our underway vis-à-vis more our encouraged the to of QX second employees I'm than action continue deliver proud ability momentum to are to services September, quarter Deliver FedEx Innovate team's in for diligently We

declined a down quarter. of snapshot all Slide Express Volumes primarily across the to X at double for digits. Turning low segments,

yield with Express, partially by at FedEx such, offset by actions. a decline volume and was management down higher growth FedEx Ground. was by partially operating which FedEx As margin offset and driven cost declined revenue Freight at Adjusted X%, and weakness, EPS

being able exceptionally and example despite delivering margin. the by volume A to cost experience. our second the proud knew improved where, quarter would of continued great to quarter, X% Ground, enabled operating down continue quality, inflation. I'm and team's operating All Freight and to-date, revenue the actions customer the income to that quarter into an and this were volume XXX points both a we due targets. we challenged said, earnings execution of exceed volume grow in And outstanding we to result structure coming on focus due lower basis be us focus meticulous cost to FedEx levels of the high which at this margin was cost to softness FedEx on aligning

to quarter. cut of Now This over I'll savings, with plan. relative In year-to-date fiscal last the brings shared to provide target costs you QX, an update on 'XX and we cost total to billion. our exceeding $X.X decisive June in progress plan achieved million our our aggressive we $XXX

look 'XX bringing year, to be we the of the target savings, fiscal have year to As we $X.X additional for remainder fiscal our billion in identified cuts. approximately

Turning to Slide X.

also defined superior are has upon on that these the throughout laser-focused history. execute XX-year we our FedEx As delivering service actions, we nearly cost

I this to two U.S. mentioned, holiday just in days. shipments locations than more our our is As performing well at season, in Ground ground FedEx with exceptionally transit the faster time nearest team delivering competitor. peak is

and taking service, ground and depressurize Netherlands intra-Europe to alleviated, network remaining our optimization strong Express. is package reopening of technologies. made in capitalizing Service to continue De France, to the improve transit we are Germany, ground Gaulle of service improve continued Italy, In service at Spain with performance. also been largely have of and pre-pandemic Airport completing high Paris levels U.K. Our the rest network Italy for progress issues at Europe, the continued which improve February road have of will on the XXXX. service by levels, We're Charles October, enhancements to handler in our action including efficiencies showing the challenges hub in address back sustained Novara to The hub route levels the the supported and and we to further now our scheduling swift service.

ongoing Moving to structural on Slide transformation. an X. update I'll now our provide

networks years our our XX spent building portfolio. and growing have We

result, As provider network the any a now we industry. most have the of extensive in

our more of billion facilitating I Chief a with than urgency full $X potential. and long-term executing our executive fiscal This our are on reductions network and in I'm Transformation the value includes now achieving 'XX to DRIVE of commitment confident how cost have Officer, Krishnasamy, our Leading on through profitability annualized year deliver support realize who program are to fiscal of financial purpose the We advancing global our comprehensive year strategy, that XXXX. focused sense is and Sriram targets. we optimizing transformation our structural DRIVE, program. full DRIVE is this team, our by

focus the which call to target a we for executive XX areas, led identified is vision have for an is and domains improvements. efficiency strategic business. around We sponsor aligned Each specific by

measuring progress. and are domain's savings against FY track service We to using permanent to 'XX in success cost metrics level target clear financial each addition operational

and network assets includes build areas: savings. where more efficiently within three $XXX to network main future. digitally Express, our work to and the and million focus efficient agile, global in the led. DRIVE Ground of is is Our shared transforming An in expenses. This to the overhead the network we we to tile generate the FedEx allow balance third-party optimize allocated that initial us FedEx airplanes digital is Purple expect deploying and be Express, team approximately as At lift priority air

expect behind February, drive we Express' will for productivity and annually. tools pickup of and express With In to our addressing result that also automation. integration we last X/X over design optimization. the improve efficiency. in savings, bringing a spent network we shifted P&D new delivery digital operations have planning are to several approximately Europe, will efficiency we and in where globally cost our In We're deploying savings adjusting million implement us, improve of years We and have networks investing network, U.S. together. the capabilities route $XXX

and customer This Additionally, improving intra-Europe service will to to and all our rightsizing of processes we our European the enhance are business. both end-to-end journey. network improve serve profit air

turning Now Ground. FedEx to

cycle. of on focused are the every package life We portion

additional tools, only line year-over-year, we Ground, and for not In Across we a we the provides responsibility This are For expect both our drive and savings trailer. This improve Express applying insights focus DRIVE insights are transforming and domain. capabilities. have improvement increased continued areas, instance, operational X.X% Ground increased but haul as we that critical dock per Within platform. is operations, and hour. labor processes per in those tools we metric delivering way packages leveraging to packages and also savings we new the QX, sustaining to technology deploy operate. team's goals foundational data, for the

our customers support customer ability support a and overhead allocated and includes service functions One optimize reducing a digitizing for win shared and procurement, Finally, a our applications, our expenses functions. and collaboratively operate significant a procurement for reduce creating model spend. opportunity. to our are enterprise centralizing digital and by best-in-class through example calls we to of redirecting function Within win to digitizing FedEx customers. spend This is are central

are we there setting on as conclusion, contract structurally cross-OpCo underway realize 'XX. is focuses to costs consolidate initiative year cutting spend and the in transforming our momentum up immediately of second half a value network. transportation example, our to our In For fiscal strong team

continue our calendar details to provide call host dive to our XXXX provide the of plan to will DRIVE we and first on transformation. and a We half on updates deep progress, in DRIVE additional ongoing

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

Thank you, afternoon. and good

challenging. saw first through As end expected, the second the quarter November. of trends operating toward we quarter The persisted the environment in the was

steady as due and FedEx In urgency Europe. Revenue I our X% sales network our As we're adjust have am to Express with lower down as Europe a softness Europe, products pipeline our trends we to we was result, making for and but FedEx confident Asia. in demand quarter-over-quarter. in experienced while at to momentum improved in volume for and primarily we yield year-over-year, acted a continuing volume robust services, progress customers. deliver

our our freight. ability are and unique leveraging and We road bundle network to faster parcel

we share was performance as moderate. transit market despite we beginning and driving profitable remain Despite driven pleased remains once operating lane. with up I solid Freight, mix. improved up X% At ability lower especially volumes. yield offset trans-Pacific by strong the fuel softening we was discipline yield and softness, higher X% due Revenue the strong, volume revenue environment levels times. industry to to and laser-focused share in margin volume, LTL partially created increases to product to was is the FedEx best-in-market Ground, pressure, team's As base growth. improved our and again across team anticipated, Asia. expect Pricing It by in quality delivered rate revenue We FedEx rational. the am the At demand surcharges, and manage delivered the service on

pricing. the weight-based our navigating believe While We the pricing pricing disciplined. FedEx dimensional the of Freight dimensional and I update also innovate. to in We're and continues capture current industry, provide initiatives enterprise future an strategy quality. wanted transformation. the and We LTL revenue we're environment, remain this improve expanding on to leading simplified this piloting to is

right X.X% general a We in are high focused network profitability. rate increase remain continued and growth on optimize I a announced the confident segment in capture September, We rate. to in

We to leverage surcharges pricing continuing align also to are our to cost.

is and create detection are demand-based has also team's new This are a export detecting Our package correcting partnership points. improvement. to the capabilities. good price invoices progress DataWorks between a I'm the customer success proof they overbilling great recent engine. A pleased experience to large sent build before for example very anomaly is had surcharge and significant The announcement with our to team and fuel customers. U.S. pricing

We revenue identify underbilling to opportunities, quality. will increase are adapting these now capabilities which

has toward team. improvement service we half, into the As sales translated momentum look our good for back

pipeline we and the in Ukraine which as with robust lapping impact war well the have the targets. of we disruption integration in experienced beginning small the In European be we aligned and region. our air addition, medium In QX, a as includes will of the segment the strategy,

of volume fiscal comps result, As through as year. improve a will the our this half year-over-year we back move

increasingly economic environment, to lower for expect services. pressure yield market In due is to the in do deferred services. shifting the face we current priority to However, Asia, continued demand

relative half through portfolio I'll for said, our back And in and shift year. our transition. in to relative proposition fact, our manage the will remain in cost of competition year. we being that, the over our capture market of remain our fiscal That will Lenz. to the our service improve turn will strong. program Financial in second we to yield this the right to and prudent deferred the Mike position profitably expectations it conclusion, half DRIVE value serve Chief And ensure have in market Officer, volume In with the have the We demand, to

quarter, revenue a I'll we more variable XX. In and Slide environment lower profitability. challenged second that start the costs improved delivered volume Thanks, between impacted on alignment Brie. amid our

$XXX below half decline range approximately outlook FedEx quarter. about remaining by in $XXX and was revenue and combined. the an accelerated lower our the million quarter driven by Ground million The Approximately the variance coming expected variance this Second of versus Freight forwarding to Express was balance Logistics. the end into at revenue of was QX we due

We earnings have this to This, incremental the volume to offset additional in reductions, the $XXX cost QX moved improved faster and reducing combined actions, an led with between with discrete to shortfall outlook. realized. million savings our cost softness offsets relative lag

lagged partially XX% reductions Express, due accelerating offset X% driven by exchange XX% increased Package by across rates, to Starting declines. Transportation by fuel primarily operating expanded of lower fuel QX surcharges higher X.X%, XX% growth product the segments. mix be yield Volume year-over-year, partially higher and income improvement as were yield nearly management grew and Yield to as pressures improvement. drove by with margins volume volumes Adjusted surcharges, profitability pressured. base slowed cost pricing to to impacts. offset from products and declined continues rate supported Turning actions. basis operating Ground, operating points income regions. levels In initiatives XXX yield and all

profitability costs, improvement. decreased well the Our execution driven as higher operating solid And offset by This at to reduction supported costs purchase partially actions, operating team variable was with the other These amidst wage income including with cost increasing volume by transportation shipments Freight, factors improvement, increased higher near-term adjust including team strong and declines to also expenses. higher fuel were combined drive margin greater yield XX%. partially continues rates. by by as offset surcharges, ground

I'd you XX. like Raj to category. from Slide near-term our heard what by cost on reviewing to progress Turning savings, build on our

U.S. Express discrete cost to work where identified A our of do going than As projection. plans billion we've focused. in where eight coming reduced X% second international XX flight domestic from frequencies. aircraft. international and have $X into while hours we is $X.X higher portion routes, is translates of down down which X% the those year-over-year. large five savings to most routes pulling mentioned, reduced parking by majority flight fiscal U.S. and reductions flight 'XX, the additional are billion reductions the prior quarter relative Year-to-date, we've and This the domestic into is hours our in

XX. to Moving

to 'XX year. by addition the to FY actions, expense $XXX which we million incremental our lowering In billion, also initial $XXX for forecast from approximate an spend reduction an our plans the represents capital million are $X.X

the demand on intensity. slowing With more environment, assets emphasis deferring the as the maintain overall pace lower we reducing capital of efficiently and we're our using our and projects deliberately

quarter with Our liquidity cash. remains we strength, ended a and the in $X.X source of billion

$X.X of transaction, which billion year. be We the by capital a end executed completed We this flows our share strategy. calendar accelerated will continue supporting cash solid to generate return repurchase

product planning reducing and strategy to return the value categories, in first demand trends U.S. outlook, declines continuing major we continued for our second our creating across the first capital shown reflects the Provide half for are volume and what additional product intensity FedEx both XX, for capital Our tomorrow. while major on to internationally during and our accelerate in for context for half Slide we've changes and reinvest categories. to in throughout Volume shareholders the in today commitment monthly quarter.

in half fourth we increasingly third end Yield second to comparisons fuel on surcharge by expect we the in of of will and in declines as quarter me volumes. we comparisons softer the Asia. Express volume with the normalize look As prominently moderating quarter year-over-year easing as the most growth lap Ground onset the the customer pressured shifts our be and of XX. Slide demand begin further outlook brings This year, to to

expect to drive aggressively challenging FY second in the to continue we we reduction business 'XX. of While actions, half cost remain conditions

basis, expectation results in and second expect follow in fourth versus seasonal the per between a lower $XX quarter adjusted pattern quarter. we with quarterly highest our the the $XX. current to share for quarter On third Our full earnings earnings year and is historical

quarter on fuel, impacts, our reductions Second inflation as were year-over-year particularly offset expenses adjusted an basis. flat activity essentially absolute

that half, project reductions we we'll identify team up Closing, immediate for performance. With well through implement we second both decline the our cost certain as entire cost questions. and structural year-over-year the continues like it conjunction As as in move that, accelerate aggressively efficiencies with to drive open your initiatives to reiterate expenses to lapping to as improved increases. I'd increasingly cost inflationary

[Operator Tom Wadewitz of from hear Instructions] first we'll UBS. And

give some can the broader Yes. if Raj, or Wanted $X $X sense detail about But bit breakout at a you from you cost also? frame. could on to the you then out. look know billion you number drives the a billion and shared see talked And of of services don't in I if of Ground take what the Express, split. give the like

Tom, Hey, is Mike. this

at I we our on down really were I'd for our first, a another primarily billion delivery flight FedEx the in year. a incremental And great services additional our into combination plans organization, coming what particularly for too peak, Express. they're that's operations earlier reductions, post sort It's the further relative FY 'XX to highlight contemplating guess pickup So the in then ground clamping of relative and of space. services, piece was mostly cost the adjustments at year, cancels, reductions job to doing $X where to further shared

environment is is billion keep Ground in allocated as As is in the Express, 'XX are and structural you highlighted that forward cost path Thanks would billion that that the then are demand assumption DRIVE, FY to that $X approach the irrespective mind so the we've billion And can for question. we and the objectives those, we achieve a outlined. billion we of make $X.X that shared reductions $X.X it in going for towards relates expenses. $X.X those

from and hear of Cowen Company. we'll Helane Next, Becker

the you're correct? just you to talked -- fiscal that is it will related moving that spend clarify, Just the Mike, reduction one that question still just in year. this to Is moving right, will current you CapEx, spend -- money, you -- and to correct not you're

So, we and number projects initiatives. certainly have a facility deferred of

certain evaluate as other well component as So as of chain circumstances. the major pause we to that is completion a phase a projects there at looking

it change a aircraft piece payment is as of our in Another schedule well.

So, deliveries we've further, timing that the out of pushed number but that a in unchanged, remains just sense.

And could of you to during sort just there were Could I salaries, that some Because wages that? follow-up you with that then just up. Okay. thought ask was also said remarks prepared your and kind I on a of there that explain benefits. okay. -- respect actually decline looked salaries

missed of kind So that.

of we'll to do, terms now. seeing Well, we year-over-year middle going typically we addition, ramp have resources were quickly move the see in peak, so particularly networks, but year. successful as rates in will the peak of certainly of in there earlier the increase relative Helane, come right in post the we that to down the terms as mitigating the we're a in we down what in wage flex deployed as past And we

progress that well. So in expect forward going line further as

And Sachs. we'll hear from of Jordan next, Alliger Goldman

how are the the billion. range. numbers I mean you're think the profit. perspective? you with economy. your maybe of quarter, the Is would are second saves that in all some And about decline we that the context by recession $XX those assuming especially beat Maybe volume, do a $X some obviously, it conservative? in $XX question a on second upping So, in mean monitoring in perspective, or the operating more -- from the to it because cost conservative half we saves basically I a view seem, cost

I'm approach. just very you've kind wondering conservative So, taken if of a

confident take the on $XX and and the considered We trajectory out you And our in there, with Sure. Thanks, the yield highlighted within $XX cost of certainly, we're very of the volume both corridor highlight, environment Jordan. those. remains the of a range. to Well, I conjunction with would range expectations outcomes for fluid. outline

So to in while through more we're moderate volume it's those particularly yield going we the of saw the we expect true, the move the year, first the in have declines, increases we QX, to year. to rest half the pressure relative as of

elements the the guess So projection projecting that that's line together, when the say three we're I demand while on bottom But volume, essence, what to experiencing. that you profile in bring you I currently gets we've we're all declines the of highlighted. there same that would those also moderate

So puts for full in that context it you. hopefully

Hoexter hear from of Next, of Bank Ken we'll America.

take Jordan think savings we If a step just you have so on it maybe billion $X.X it that like could seems -- the I just further, hit far. that of

that maybe back your clarify $XX I can savings, to And of of to $XX volumes means $X right? all you gets like you -- then before So $X.XX the versus you were whatever given adjusting pace you the of now, guess, Mike, that all structural of X.X billion, what that I specify target of second takeout you're if kind of given is just And for seeing? mean earnings to to that cost or half? half that the that, the savings. so targeting the it's found want X.X, seems does new from the

address below expectations. environment the quarter, second I is would was that how Ken, saw Okay. the as in you our revenue

had we therefore, cost for half we motivated assuming the are to year, that FY going into 'XX. the planned which relative second of what takeouts of forward So near-term further

So also be even in we through absolute QX, reductions QX more into a in and we're expense ramp-up down revenues QX. see we will so to but move to project as year-over-year going

look absolute So year-over-year. it basis for you that's the when at

clarify decelerating is revenue Is I a what structural moves that think to to again, just -- to making just understand these investors reaction that so want FedEx revenues, clarify does And here mean just way to reacting versus understand versus are environment. trying to -- and your slowing so the that to I'm cyclical there these that, that? -- are it's -- the is just

that about X.X unique Well, And we the reductions X of years, FY a over operating billion permanent Ken, from we were 'XX. last $X talked recognizes circumstances in maybe very years.

range takeouts By return that mentioned the And of parked during end so demand the fiscal additional projecting we the that's of course, And park in most any consider. I normalized XX year, would you additional under aircraft five that of scenarios quarter. of we're those Express. to might second not aircraft.

So for little gives and more thinking will of you network resizing hopefully, context that how a the be most wide-bodies. about we're those

you Great. will missed to and good be Condolences on luck Jeff, Elizabeth.

Thank you, Ken. Really appreciate it.

Next, we'll hear from Scott Group of Wolfe Research.

you expectations continue just improve? the talking back talk segments a about that can parcel an continue LTL Brie, then Ground I if wasn't in Can sure Mike, was about comment, improve? Can margin improvement? pricing comment. to half? for Can back like the sounds the get you to were slowing. to margin Freight And Express

a you give little more bit if So could color. us just

the Okay. will fourth Scott, quarter more Express say quarter. versus remain I so the start. the margins will in pressured second I would third in half

outlined, year including into of fourth air we Europe, integration the some lapping we're discrete traction challenges plus fully up reductions well more last in quarter, lapping network from volume the inflection there. factors the as with ramping the as the cost Given of the seeing

driving volume Ground team the remains within and at improved efficiency the years, where two Express I that and laser-focused productivity we to over on on labor most past Ground challenges environment. last -- work we're do. a rapid and declining the would now they a was executing the have growth are So, say

in that the going here second quarter we and in see progress continued expect of the in great so saw half second regard the year. to forward And

little to dimensions pieces hopefully, it. to the gives So take? Brie, that you a want of do

Scott. Sure. question, Fair

And domestic half. Back that a we in in versus than go talk the did the still have are although we first half, half. markets, less yield half the we will market, holds the decrease parcel that international we we the Express much Ground although half both less growth domestically. true market, that The in see front environment, in yields than When let's the at the the will anticipating same front yield the in So half for we anticipating are from back half. Asia we growth inflationary we in are anticipating FedEx will back then perspective, look and we as back growth half. change our experience is largest the second Freight to still parcel

clear anticipated a range Mike has Now also healthy margin. that lane very I really this. want within our lane that to Asia profitable we've a and really given And does we us. trans-Pacific still volume, for of the And job and for that good yield accounted us, team be and is the managing

yield that's So versus within half. we're but front range, how it the is half thinking about back

Next, we'll hear from Brandon Oglenski of Barclays.

fully then heard a this an second other can be billion are lot billion between that this you're But And the Mike, year. we now that talk I similar us but And you help billion isn't to billion and permanent achieve back, you understand, Ken's folks come $X.X Guys, going that I to might shed just year, XXXX the here. might can understanding of aren't then? $X if Jeff to incremental going confusion $X maybe that you that think thoughts $X.X Elizabeth. and mean, on I the you're very target? to DRIVE

comments Brandon, for Jeff So thanks the regarding let me, first, and Elizabeth. kind

will We both certainly miss of them.

to little a we initiatives year. And undertaken where get the the address that into the more illustrate the billion me to Let was circumstances about reference magnitude that's started and context from that of plans scope changed coming cost the have the of purpose reduction. our we to $X.X Appreciate 'XX.

have a billion back. much Express, permanent that the as $X have today, we takedowns are In flight coming it you made environment we highlighted wouldn't of reductions. we of see So the demand we the those structure,

different own partner-lift way, to the our tail Purple most there using we that ups comes and and in when in lift said will may downs. in as would back manner come of of we out it recall, more and of it the you less think there I possible. will a cyclical be would anticipate current efficient come be circumstances order be But flow we always traffic back, --

in we assuming that for when modest the So emphasis in on context June again, the outlined think degree revenue 'XX. of the than $X growth FY billion of reduction back of cost rather the goals were about greater a DRIVE, we

the focus there that scenarios cost to could a structural is across what reduction that's that envision. So of you range demand

hear we'll Allison Wells next, Fargo. of from And Poliniak

up I the just last want follow comment. to on

deceleration. clarify, now? of is So challenging right of 'XX reach certainly cost changed in 'XX the terms just sort and fiscal given macro the algo fiscal balance on growth based that of some just the those structural clearly of targets targets to and how revenue the actions you through cost Is

Yes, insights You are use here reductions. it. We date as and the up structural in progress we around even those degree we term near And identify hit ramped react in in the you progress then to well. cost that's we and are intensity made will those looking to if great -- identifying why Absolutely, to the the changes, Allison, have as environment second as saw to even on quarter more. made the we've further adjust the

of Next, we'll David from Bernstein. hear Vernon

out of still build to a is was this bit stuff to could Or any or to stuff contemplation chasing kind terms you as So fiscal the from make many fiscal adjusted we companies economy right? in the composition up about better? or bring of the of same doing the earnings are down standpoint? transformation actual FedEx effort? is wondering a that a the got this If an we're Raj, as talking can mix bit that of you $XX just sort of level, $XX in different you of start year, part of little there risk which if that of And up 'XX the little we I kind in from are maybe of targets about base this longer-term 'XX, portfolio ball the and think there, hill you a then product put in changes

So thanks David, the question. for

down. And just how we're say structural terms so, fast I'll cost just taking I'm in see performing delighted that to our of

So, to that's I'm the DRIVE because what going gets goals. program comment here just -- on the FY going to us The 'XX

thrilled entire built to on of how is structural and level a And simply goals. drive progress innovate while see strong the and made our reduce helps we growth DRIVE is to this execute of digitally foundation that, have strategy is I'm Our service. us of costs get and extremely team. executive engagement that to the all we those profitable we the

the all this as an domains belt. execution. amount have, are and about significant is executive the with will, not KPIs we KPIs, plan people a this as is each identified, earlier, in one-and-done involved. from towards the to like exercise. scale We an And then rigor teams have And sponsor, slide a of way X,XXX I conveyor initial idea move showed XX there's a This, with executable

So this we about important and very think is 'XX FY 'XX. as

restructuring on base, focused cost performance. improving margin our growth fundamentally are We operating driving profitable and our

external So we can't is. what control environment the

calendar we control. to we use of the this in. 'XX, base 'XX. went we And that situation things of significant talk that better the focused a deep out come you that more update that on first of are external And We environment can have much and than you will we to DRIVE half the in much, component in dive about drive program is

when something We you that, to Thank David. about looking to are at talk communicate. what And constantly you, that to we will there's see opportunities exist. portfolio definitely the

Next, of we'll Jefferies. Moore hear Stephanie from

macro level maybe wanted take of question guess here. I a higher I to

haven't to You mentioned that XX next maybe noting online in to on the reopening your had U.S. potentially looking broader general months. the all any if over then here kind I'm guys mentioned I'm economic surprised, you updates. come what if in curious you about what's are thoughts Maybe of that back age economic the guys softness continued potential Asia. giving economic tailwinds. conditions just of and that hear of and drive happening as I economy kind yield guess, continued talked at thoughts wasn't monthly terms China outlook the an we

let details, we can a me level right And additional and hit then jump in afterwards. Brie high adds

more there economy On the we The flagged we're the it, to and have and our there's that -- I'm structure. done, adjust proud the are improve control. we is aspects we two we around we the what were exactly those cost world again, circumstances. both happen. was an will going very that things know progress the And of but continue to And news of said slowing again, we e-commerce very, being reset, made. macro we like good be these on absolutely to with Europe moved And focused happened things hardest industrial work we the we -- can much is reacted hit faster and to to and

Regarding haven't in or the last any fundamental one seen China, we the weeks. few change way the in other volume profile

any carefully, this us for to and We add to time. very at are here? this obviously make comments anything Brie, early it's this on monitoring too further very very,

that's exactly No, I right. think

any right we're the We But couple benefit demand ready have have over how back weeks, and consistent potential. from team the poised for planning pretty signals the the and been now, half. that's of so to last

Stephens. hear of from Next, Jack we'll Atkins

Great. Okay.

of I guys take changing, fact forward, framework very you, capital the changing you to overall. over and some out but Mike's at for appreciates you past I as is organic guess, all, you years allocation on allocating on you challenging think you're about CapEx of opportunities, carefully. several one's sort love would have emphasis around and that structurally this the efficiency look Raj? the the issue I there been the both How as get the greater to what's investments kind how look decisions get capital And everyone thought as thinking your there's that monitoring be Raj, I your Company But as decade. So well, next curious the inorganic over with invest for sort how is if I a of are think about capital.

drive significant project has make obviously, we we -- ROIC is are to and through a perspective. make approved that and Jack. we you, to financial then, a plants way that an go those work every sure hurdle Listen, now the Thank started has perspective from go and the through Okay. to from are sense

we we how So projects forward the go here. that about through far we are think have is changes here high come it way good so have fundamental very that returns, and -- news

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

rate Jack, few in mirror. the look, ground of rearview over years, at growth, high that's the past particularly the

will ramped we down expansion are us FY front be And spending in years, replacement so, forward. major much beyond modernization. in going as we of FY facility of which 'XX -- next over the have on initiatives not couple our The fleet

FY network. of 'XX beyond our yield long orders new aircraft the will Richard heartbeat firm and the no for well, efficiencies over and which likes modernization the Memphis term. as have to That hub, a completed is, as that Express years in We call few be will it, the of

capital path trajectory the have of sight And to outlined, to we of that clear And a hence, beyond be committed X.X% expect payout that. we down. the are reflection were a dividend lower major improving and ratio within those fully the So it elements we're allocation line as hence, coming that those as regard. we in in down headed we and 'XX the up and our of that the

We'll Wetherbee next [Operator Instructions] from of hear Chris Citi.

domestic wanted the I get seems to think what segment. It economy. quarter the second to driven the domestic you in by about Raj, step-down seemed be activity volume across on the in like in more

are and here originally the seeing or actions fall the some if late here U.S.? of cascading kind that some of in maybe customer you in we're So specific you're of the flagged that quality summer into actions revenue into international U.S.? the in sort Or there curious had softness the taking

environment. me just about let the Well, talk macro

I think main e-commerce issue States reset. the macro the the United in is really

retail. e-commerce prior represented to along to follow the were about you here just pandemic XX% If of

During of about kind And XX%. going peaked it's the ever it since, down. at been pandemic,

about probably but XX% quite or high still are higher than right It's not We as now. XX%, XX%. XX%

business. in So that's that's reset the part going on U.S. of the package domestic the

certain on the some Of of economy. course, actions taken traffic, revenue FedEx Ground also of we have segments quality the specifically

than here say, unique the But would that's is, reset. other is e-commerce FedEx. And to only other biggest macro the be this so that, part that I would

from Mehrotra question. Bank Amit has next our Deutsche

Mike, So of ask I couple maybe quick to a ones. wanted just

I the Lance follow-up the a a noticed but that So ask big what which an then us of questions is what but kind Ground seen if were haven't would you're the on don't or on something from in Because express this ask that idea had the overall business, profit I don't Can FedEx about I profit, contribution ago LTL TNT is it's in FedEx is there's also will bringing context profile. But the don't And an of of so wanted sequentially, I is is down you to to think XX of business? proper business or to lowering is understand legacy if losing but I means of the industries the be I is as the can wanted as of quarter-on-quarter. overall both business. just great. network the and helpful. get have business, of more war understand Freight the Express or in of business. business, air making give basically I down, that piece has the yields in to And that I FedEx to drag in the see course, know freight Express being I'm Is Freight understand what which indication cyclicality the hours you was that legacy the with And you that trying coming years the flight the that to European of this well? and business, pricing impact Freight? what lot in on, today? it know the we in volumes price business Freight talk pools respect typically discipline part that the the kind pricing about the is TNT

your first, Thanks. about Sure, address then let Amit. Brie the business. address LTL and question will I Europe I'll

we We've a in driver had calendar the the significant year. challenges the highlighted of the for earlier Europe that is Express. upside So in potential opportunity look,

have contributor Express' significant and see in to in air We The forward in coming on will initial terms has profitability efficiency is team year-over-year network improvement. there. we of activity both business, team that momentum past the very in The on worked that ground traction going focused those. confident leadership driving fully more improvement the some in a seeing QX and winning with

develop events past had So some we're we It's And we're of we've the there. that Express, and for longer than would have those, absolutely anticipated. getting along is forward. opportunity way, an and certainly taken but confident looking we Brie? are

actually public of perspective, seeing however, all we rationally market, very disciplined. Mike. market has we were slightly are FedEx looked a see the FedEx that proposition. different carriers thing From was When did one, we Freight we at that number a down the weights from is question quality have Freight that the Fair within QX, in behave to and two, value very remember, premium Thanks the Number is one from slightly revenue QX. that QX perspective.

of types two service. have We

So, Canada we Freight have great we're And our opportunities move seeing into high service. to we've we've economy a which FedEx allow still is service And very focused priority great that got for FedEx, Direct, that right? two on. within got We've very a to opportunity from we're customers our FedEx for profitable very profitable for. got demand

the industry. be we continue part are disciplined. be to and history, to focused disciplined right absolutely the are our going we So doing We know now within to very on

from hear Schneeberger of we'll Scott Next, Oppenheimer.

and type for there, update speak information XX receive with a and that's targeting, you're be the bit a in you levels small really this these a of one to maybe service half, could delve to overview on you then may working I'm for one more how intermediate-sized for in businesses. Could I'd Raj, spoke you've and and we call you and when Brie, then, you you there, hear? the into we'll to domestically for regard team Europe? curious for little domains given expect good first good the Raj, And Brie. improving question you pipeline the is just that curious DRIVE. about sales and what

Scott. Well, you, thank

there The -- equation, part excited progress the making some I the DRIVE very -- XX as domains we said, yes, are Express. here. the again, the the of we're under of on about are have, On -- we

be the have demand will to air about a changes We parcel flexible network and our also deferred recognizing agile in freight network more restructuring be this component. and is and Express to domain fundamentally bigger air that

U.S. also we partner use loaded to network density traffic. network, And how deferred how our So we firstly, using to do move to the can then we domestic there then see efficiencies change and do our get looking technology. especially at improve networks what

domain the for a other is area and is focus big for The Europe clearly one part is us. here of

like billion opportunities this things billion have very board. whether shared haul of And FedEx this across improving are course, with the procurement interesting back-office There there, dock it then, or is $X.X We that. our productivity, line Ground. services $X.X of is and is through efficiency

want an all time don't exact here that you this a meeting, take will Brie? And we go you up that through to but So, the we of on to we'll a time I haven't talk yet, the -- decided set will detail, detail. but I flavor date what is We'll program KPIs going specific more to we forward full about. will about give try you at and all give

Raj. Thanks,

So I this question. love

our Let's momentum. talk about

busy a know about, team are a I field, listening, the ground of who team. couldn't now, States, right sit and I in know we as had be still we stellar done The But Here peak. more week service great yet. very, here not the very as had I the United know we've I to proud operators talked the I just execute. have in we're and we've

of turn competition. calendar proposition, year this domestically, kind year, on we very the chapter the than to calendar we value as So next faster primary our have more best

which feature, of We new picture, great have proof response is getting great this in for field the delivery.

service. have Sunday We

all getting e-commerce retailers feedback. accuracy through as which delivery, we're labor of And a date competitor really estimated their times, you on greater has called our capabilities digital brand-new know, have primary conversation. We gives great and to delivery significant manage our

to are that same look is building very very in this strong, confident are Jill and come momentum peak the true into as her team going and out very, we we're in we So, January. Europe. The of

an a and where FedEx done in and for is excellent get But work perspective, continue with really optimizing. our We you and Customers Europe, I'll grow, in Connect service international with intra-European called quarter-over-quarter from and we the that, has to domestic, seen team In to the pipeline optimize business will have the there. for We've States. Karen service perspective, team that us, From I a intercontinental perspective, networks have really we and has improvement volume networks I'm the brand challenged. been you right quarter-over-quarter, has believe lines quarter-over-quarter product confidence business put division. we're domestic with into there primary of out Plus, has and in well and got lot three see continued an have FedEx. From we opportunity are we Europe domestic And we've pleased the National momentum. our those that are done tell got of the it and domestic hard networks and to the the do the improvement. some us. sell. of then the for profitability we want United that a business we And from to European And of seen have

yes, team plan I'm forward best just the So think to looking have execute we January, in I to and sales and I talked about. the the business go

come Our final will Brian Ossenbeck Ted from question from JPMorgan. of

with really balance a you packages you continue shorter volume domestic confidence near service to own make your that there's Can as negotiation. and And price talk you opportunities a And to think a weight rate more then and maybe a able bit your that about growth that capture in declining to to with more the protect approaching the Maybe lighter hear going and if see environment? competition. that see? if I you how you're Brie. are perspective? gain can more to follow-up any here our presents both creep relation about in And longer to just like you're getting that you from how that team's room to distance you're go high sure that the And the e-commerce would of about term term, separately, and little talk mentioned in share?

Yes.

we So here anticipate world. perspective, capture in right and the our the a around States high GRI on pricing from a do now, United

lower. Our around little in GRI was it's X.X And a a little in that places, bit world, about the some higher U.S. the bit

That for One, out ago, differentiation focused pick a being said, have moment With the on very as service I the We that. high better and need very, things. the most I and team really the on command GRI. is customers team mentioned a focused differentiation. higher marketing understand a when inflationary two executing a a yield environment, is we

command higher price to build can yield really we're detection we in year, about and So us and new align price a building We June which capabilities to and really, also a continuing a Two, revenue we also new are make be about to closely, as features cost talked anomaly in out I the this market. quality we engine, talked I lift the perspective. really that sure get want balanced. help from will then

the customers to right the acknowledge choose we're and our have going and margins really that working also deferred that some We of our to are in hard product. to get portfolio, cost

long with business it going to bring do handle us We far with the negotiations, how on that professionally to for to and to want As going want as we're grace. we're term. do customers

And customers want if our and be base them know are course, and and for business her health segment, loyal will in of and long the make Jill prepared. us here now. have that do with thoughtful those conversations we team plan care, for BXB, term. to they so really want they with target them they to sure ahead to small we our We first And business, protect, want foremost, right

today's Subramaniam This concludes turn for portion call Q&A to Raj comments. closing call. now of the over I the will back

with just team our you closing I'll very say to our And thank in accelerate that Well, urgency moving much. is ongoing transformation.

and ahead, strong our back today. significant there's of confident very into FedEx, you we'll everyone. move for team's this momentum the in your know the interest you We execute. all half Thank opportunity to date, year. your Thank We a all to have happy on progress time in ability build and made as I'm and for we holidays,

today's conclude call. you participation. all Thank your does for That

now disconnect. may Good You bye.