FedEx (FDX) 20 Sep 232024 Q1 Earnings call transcript

Good day, and welcome to the FedEx Fiscal Year 2024 First Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Mickey Foster, Vice President of Investor Relations. Please go ahead, sir.

to First welcome Call. Earnings and afternoon, FedEx Quarter Corporation's Conference Good

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

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

considered would statements. in like differ will statements. could order be cause session, may participate. Certain implied from projections our callers statements performance which be uncertainties to results all limited or those forward-looking X forward-looking as materially accommodate question-and-answer this who are risks, allow subject such to in question to actual to us statements factors such conference those forward-looking to During to other call and expressed future regarding Such by

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

Dietrich, President, Joining Customer and CEO; Vice Subramaniam, us Officer; today President the Carere, and Executive and on Raj Brie CFO. President call are Executive John Vice Chief

It Before team. more October. quarter. days best turn his him to my FedEx that, that has share call to believe from the for been views I'm are a to I wanted old, as privilege part I the I over with truly ahead, sidelines know to on am family. With the spend years of of cheering turn now and Raj a the it the let be that will retiring at will everyone XX want to I I over Raj, end but from I longtime time I FedEx FedEx's being

be XX I upcoming our years, retirement. and Relations team to Mickey He would nearly you, especially good the first XX for Investor for and calls, years. this after annual by earnings him Thank like to outstanding FedEx and congratulate led He all has and audience, his tomorrow, afternoon. service missed will spanning thank Mickey, XX on his we over meetings.

this the and financial at expertise of that very Officer FedEx. Dietrich, welcome a this our for Let happy With I'm and years John more FedEx. operational XX team opportunity has time for and he industries, blend a to in of the hit Chief very Financial leadership ground John take to company. unique than our He's important also me air cargo brings aviation experience running already joined

now we what of driving delivered strength fiscal 'XX. entered what So has delivering turning momentum, year with the team dynamic disruption, fiscal months. Amid environment. FedEx I'm said last the expectations to results over over what the accomplished We we ahead in in quarter. of significant 'XX a billion remains cost and we year-over-year on would $X do, demand XX savings in proud

most intelligent well now flexible global be that are network. on efficient, the to advanced We executing and transformation in

forward. going the me innovative delivering the goal quarter to in data-driven provide service came that We our quarter that and We the dynamics. excellent further solutions despite execute experience. first while customers ability progress gives to conviction to determined industry Our enhance achieved great into our customer

well season. peak As prepare for a are the we result, as we positioned

was performance, X, exceptional to you On transformation growth, top operational spot our higher basis. profitability. As enhancing bright driven by our with drove higher see in an Slide of a Ground most profitable adjusted leading revenue ever Ground its is can our quarter yield. this year-over-year on results on

by as the indicated nimble Express impacted last be build Freight. Express by export well pressure and We Postal through were more volumes at which change and yields As yield adversely we U.S. airline. international as in revenue Service, a as expected, total revenue we that are declined DRIVE strategy addressing quarter as pressured would a

basis we points margin cost to company, team to DRIVE performance and collaboratively delivered as throughout the improvement total This reductions the a of power For the enterprise. across we adjusted of is FedEx testament XXX our implement working realize networks. structural the efficiencies

During primary labor the competitor negotiations the Yellow market. and of at the quarter, our bankruptcy disrupted

service. priorities volume high-quality our leveraging profitably clear: our delivered while protect levels Our outstanding on maintaining to We those service focus the were network add priorities, customers, and deliver flexible highest revenue. on of

capture we revenue. business these of events, terms were to the onetime our drive upside discerning While goal of in we keeping accepted with highly result as we high-quality a in

the maintain added to disciplined we our thank deftly our to expect on for strategy. execute team quarter. we I the of conditions the navigating in volume majority Importantly, FedEx want to these

turning Now DRIVE. to

benefit lower costs We These of transportation from by we as work. driven on a this are our a by we to billion At effectively. initiatives Ground, is our Freight, coverage primarily we rail cost out and way continued reduced our as were newly as result changing this Sunday reduced year. quarter. structural usage, benefits continue to million DRIVE the network, track DRIVE taking manage the third-party and system targeted of more sorts. At bid our $XXX from of purchase DRIVE the implemented fundamentally in savings optimized deliver fiscal rates cost well are $X.X base consolidation

Europe, terminal are our FY flight locations 'XX. global Postal traction efficiencies August. to primarily at the gain year structural course of on at from them further and through the U.S. headwinds network. despite Freight track delivered efficient XX of and Express, we into and plan. initiatives during as hubs expect and network during closure making We're completed planned we and over we capacity yields the the our quarter, example, And takedowns Asia more the on our rightsize the Service, In the sorts across DRIVE For

which have half continue year. to John's this include believe DRIVE savings ramp we network. outlined, our leverage transform to year excited are we previously our fiscal experience we aviation ahead, air G&A start for of And the will Looking as this expectations second in the to we

Finally, next transformation. our will I we a our X, This areas move better FedEx, our Network includes on to provide One key how of brief focus update strategic X.X. phase are on into which aligning organization is as we Slide enable the

well Services Express, reorganization are date, Ground plans with Hawaii our experience. To consolidate announced reduce or In and including Network into X FedEx overhead, X.X will will have The and our FedEx to the markets, and simplify Federal FedEx Corporation. improve several XXXX, organization. Canada. implemented underway in Alaska, streamline and June We we company, customer optimize go-to-market capabilities Express

each the service We'll for learning the delivering and delivery the providers service use continue while both quality our to each is network employee tailoring for continuously adapt operational highest to to and customers. operations the As network. different, market unique we're and to across characteristics careers pickup region

foundation As the years the physical any insights and a are packages provides changes thoughtfully us built world, transport last significant global to network the is us complete. The with of about has unmatched. executed take data will these FedEx generating of This terabytes XX being a enables network day over transformation, around supply that time chain. invaluable that that millions to contain

for our chains data power of our on smarter customers ourselves. are and for everyone, to supply make rich customers, the harnessing focused for customers' for this We

make X have use we profitable given drive make team our As experiences challenges: revenue phase to streams specific transformation, the new more and move our customer to our I digital. to through the data efficient, better next of network

outlook rest 'XX, on EPS increasing what the of remain Factoring highest-quality adjusted ahead is first midpoint our better-than-expected focused Looking FY and within are quarter service control. to of results, aggressively the range. the we delivering our managing in we

As team we continue to significant I'm deliver commitments, the to confident value. place right in to create call on over the let With turn have that, we and our me strategy Brie. right the

moderating focused revenue partner quarter, the to did quality and dynamics afternoon, and unique everyone. operating Thank pressure, volume deal developments environment the mixed customers. this remained marked and in you, our on competitive valued being we Raj, continued in good by landscape. an We In first a but

volume most though in package United down were quarter, each States. take sequentially. and remained fourth up first total Ground, increase International year-over-year, turn. moderated FedEx a Volume in FedEx X% pressured X% Express was up declines pronounced driven to year-over-year. X% Revenue the by X% the Let's parcel in segment were yield. increase revenue quarter Express in declines volume at X% year-over-year. Similar At was volumes export volume

pounds strategy by new long-term were with in continuing the the United aided committed Postal Additionally, valued by the a who primary and customers down were U.S. We XX%, partnership we freight a trend onboarded Ground change competitor. to tied and mentioned of our the Service. Across strike quarter improved our States FedEx. sequentially, to last at service threat volumes Express,

At acquisition. did from improvement volume by Freight, a daily in Ground We XX%, the quarter, result, a by XXX,XXX X,XXX job and due focusing commercial business on Yellow's we decline volume. end average in rates added the was Freight XX% volume first revenue the August significant of in attractive team benefited daily incremental As quarter. shipments approximately to excellent exited as at we an driven average the approximately in down FedEx experienced closure.

sequentially, see basis. As monthly Ground on can year-over-year volumes you export on inflecting and volumes Slide XX, with improved have international positively a

demand to in our We despite share We the The year-over-year the trends FedEx surcharges. package albeit e-commerce mix. we benefiting fiscal strong was service rates due shared particularly reduced within after fiscal including weights. in and fuel quarter yields surcharges Product late environment. this growth. At shifts, year-over-year International pressure fuel gains yield growth revenue result weight quarter's FedEx reopening were where persisted, expect lower demand put better-than-expected a throughout higher we EMEA anticipate yield year-over-year. per market saw shipment volume in of the from and an May on especially The a muted and year. saw Economy rate, Freight, we FedEx base demand to per last continue year, as at for Express, decline mix increase improved Ground, also lower product At

recently surcharges well holiday announced looking the to for shipping stay ahead positioned to peak, to demand Now relative market. season we

average and customers below rate the coming investment ensure last effectively. believe we X We this X.X% the for a year's our annual capture rate We high point had a market in along that cost environment reflects increase 'XX also continues. This to year's rate, effective increase will and with increase, general this FY serve need announced January. GRI current

capture to outside of market to will several our in piece our dimensions per new continue shipment We XXXX, dimensional the moving packaged updating in technology to we practice strategy. Further, markets from are revenue quality changes United per pricing of opportunities. find Europe, a States. we increase In to implement

we world. Moving delivered United to levels States late here the the proud I'm how in quarter. very volume with Slide as XX, of pleased around I in our was added our service team the

share market service Europe Europe. due building Europe back the the with improved also better financial service work in that And leading There's team to more lost region. still to year-over-year We are do, we to also momentum challenges. was in improvements much service performance previous are come. but able result, a in as to to We win our

As vision examples chains new enabling Raj stated, we have digital capabilities our to and our smarter for I is supply everyone, of have for customers. how a infrastructure few a make

experience are recent in data We technology Salesforce investment with customer improving the through cloud.

We efficient will informed, more X experience and integrate giving business customer a doing sales marketing service, into platforms: FedEx. when customer and one, personalized with the customer

like We which XX offering we package with by quarter. is capability of across globally delivery customers for Europe picture XX% across proof estimated delivery, volume in growing expanded a X-hour of the which PPOD, complemented for inbound This time to window delivery are window, provides nicely has now first or our as say, countries. their

XX we is provides and FedEx how claims. One customers. and PPOD do increased helps shippers of small the package in will confidence calls and which delivery particularly customer Now with markets, simplify Network volume important our available for X.X business, and in reduce medium

X the segment, becoming contracts our This FedEx with pickup deliveries, integrate Small more per independent a are that's in customer be enable X change and and by the versus has this example, neighborhood Rewards business easier. pickup that X. beyond done we underway nearly into the and gains. And our expanded we've means that, Rewards new efficient not for to will X United European Rewards growth overwhelmingly share lasting impactful current further industry is in enable a a FedEx market business. efficient FedEx more well they customer in When communities. them just recognize for lastly, invest or continue For is One back very customers XX can more Network in providing countries, with day but built and change, customers. rewards our a benefits into the year. also truck invest employees we to confident streamlined simple and been customer are as a but the only their for My making with reflect program been States FedEx we their a and My them medium the My job launch back will X countries it our businesses improvements loyalty for FedEx feedback us experience, high-value States, other later doing United can use companies. give They we've positive. X.X also program will customers. to to successful to X has our with FedEx relationships

how our teams are support customers, FedEx and deeply during them to Europe in replicate our was in to the potential FedEx excited the world. Striving current ensure of together superior anticipate with about relationships is embedded positioned and customers' and I'm service quarter. ones needs success build to We to work new the succeed this our proud around culture. provide with that

turn I to over it the financials more will discuss Now John to detail. in

to Brie, with everyone. last you, as get really continue few excited to weeks sprint up this to speed I afternoon, Thank full company. here. great been good a these I'm and It's be

opportunity One teams throughout on serves you I've of People-Service-Profit we transformative. done network thrived will few service I've DRIVE and will have a only serve customers will being to talented FedEx customers its will some built initiatives business truly over I've to best the that the initiatives Network everything differentiated experience, through also over provide have FedEx world. It only always will will continue my Not culture last the us XX the PSP to our how bring through These know, industry us with admired make and career. us. but all that the offerings, weeks, before Through it our smarter, that better. customers and enable us a optimize FedEx that has philosophy. After I've more with product great seen has admired incredible a the be FedEx and businesses execute and built X.X new short here plans As literally years. or it and our make may created leverage across efficient together our we

Before the the move getting into of guide finance organization want the as brief we me and to share priorities overview forward. I a numbers, that will

goals the already execution. we X.X I'm improve setting towards First and will really reflect One the by to move of place, DRIVE returns. on the DRIVE by the be enabled to amount integration we that and This opportunity FedEx. foremost, in team's margins committed as in financial stringent the been the focus accountability and embedded work program have the significant completed and initiatives Network impressed steadfast on the I've from tremendous of initiatives

business cash capital priorities, a returns. with the and maintaining of focus sheet, to balance our a terms on reinvesting in highest the In I'll on returning healthy focus shareholders

team partners, consistent value progress these ensure and will to our partner to shareholders significant customers years with we Our the the of in with for the towards goal come. priorities leadership delivering employees, Raj organization finance and closely deliver

months the with rest principle together transparent look open guiding financial a stakeholders, continuing have I in prior you all my be with and the community. of key and me Finally, and all for already to ahead. engaging of I in work will roles. know to from you of weeks to you some forward including the communication

Now taking a closer look at results. our

by was Ground These to XXX and points history most an Ground, and to are execution adjusted basis. first for strong quarter operating delivered in XXXX as segment the that improved on XX.X%. in taking outstanding mile year expanded operational results improvement DRIVE XX%, up initiatives margin expense basis operating start adjusted hold, fiscal line first we by at yield and lower profitable our haul Our driven productivity. including strong FedEx quarter. the were off last At and Adjusted is an reductions, demonstrated and income the cost

As wave and staffing more income transformation included Cost and despite operating FedEx XX% FedEx per Adjusted declined cost further will reducing a operating margins revenue. a day which business up in revenue. surcharges XX impact amid points efforts based than able was at to remained managed to margin structural improve Freight, shifting quality points that key is fuel at the to reductions, X.X%. revenue delivery Express the focus alignment basis expanded to result, note Express It's diligently and at of volume operating team. At volume levels, working. than shipments at a be strong FedEx the more U.S., cost was per all with important DRIVE expanding offset team down on that Operating X%. At X demonstrates income XXX dynamic the but decline of a Express in me XX%. the operating was Express, package environment. and adjusted and aircraft parking of and reductions for costs margin and lower flight lower basis This

turning Slide Now year XX. fiscal outlook on our to

outlook year we despite to $XX on the XXXX $XX.XX. range we're fiscal benefits confident we've on the EPS by of low outlook quarter of our of to improved initiatives now outlook be discussing, full first our of can of midpoint adjusted As EPS to per range. year, focus adjusted the our earnings on relatively assuming DRIVE been rest and adjusted constrained the our see view share revenue the We're raising this We're environment. the expecting in demand performance at beginning quality. our end solid deliver higher of We're Based flat $X.XX. we're earnings the year revenue now and our

be other keeping We'll Europe the forward, high in including supporting the demand Of inflation watch leverage demand closely end and economic earnings into of North also demand factors would in improvement translate course, that environment, operating key close going restocking, e-commerce We'll a on the activity range. including our inventory Trans-Pacific monitoring upside, be and impact America, trends. an environment and greater trade.

Slide how with to operating considerations Turning we're year XX. embedded profit we And outlook. our full to in consistent share want thinking about last quarter, the

billion, of improved net assumptions. For illustration increases, expected to due purposes, we're Within the few cost flow-through profit at is we $XX.XX. of up $X.X and which highlighting this to outlook, is be midpoint equivalent Revenue, now used operating a million key adjusted quality the EPS Ground. of revenue $XXX of adjusted

pressure $XXX deferred million yield approximately continue mix as surcharges service expect shifting We offerings. significantly and of continues towards international export to diminish demand

result a we These quarter first also strong last As of quarter variable by our track we're increase billion compensation. million achieve. performance, than a are from which $X.X to shared with you planning are for our offset initiatives, DRIVE the and in $XXX cost more savings structural in headwinds on

to XX. to Slide Moving returns. commitment our steadfast shareholder capital on prudent in and allocation We remain

position were continue liquidity cash. and Our with billion achieve Capital strong billion, ended expect quarter expenditures target of our CapEx and $X.X for we remains to year. to the quarter for the than less revenue the in $X.X we to X.X%

capital by for Ground over CapEx reduce decline as billion communicated, we to discipline compensation which previously time, behind be commitment investment, annual will ROIC. expect lower tying we're year as executive to standing aircraft capital we to fiscal in at And we capacity we're and expenditures Our our planning 'XX. approximately $X

generating of in accelerated the improved our returns completion cash Given repurchase the quarter. improved demonstrated to earnings, by share and $XXX shareholder is million flow. This supporting our program significant ability enhance we're

this in Looking repurchase With fiscal year open we're also let's up stock while it our common an dividend. ahead, questions. $X.X paying billion we for additional that, expect to

ISI. Chappell will the from first And question Evercore Instructions] Jon [Operator with come

can question. Brie, you if I ask a

X-year win on disciplined the as years. aggressive the been but few both may price this for change disruptions think major and to does price more seems it it mentioned had some remarks, really after of in back they be over volume. for relates way that's that prepared time kind the share period? not to competitor X- you just But You've your How that now like strategy, you last about a to very the of on pricing year

the thanks for Jon, question.

on. would So I to things a couple like of comment that

rational for first the foremost the last the think years. has and market is several pricing been I very

that important We've leader. we that's picture the the In also it's to market because have domestic price the week, better think the a we've I actually value faster on lead in got price proposition. got segment remember and got and X every network. market, are days POD we've we and we

team So we pressure, back my current as the some outstanding very for I an primary to the quarter competitor time The job win it of about job in have prepare business difficult the last make to done to won to it. responding we has that think for is onboarding competitive our and that share.

is new to So out. so just been focused the And we're customers. lot delivering executive they with a team provider. because on of really happy, awesome is service what the They're want good. FedEx with met right has these stay We've better that's service, I'm and now

Atkins The next question Stephens. will Jack come with from

first, John, Mickey, And role career. congrats your great great. Okay, and to on your you with new on congratulations FedEx,

what's outlook? of like at would a macro And I are the you're understand a dig in maybe guess in Freight the you macro moment in It your kind it we conservative help changing terms us what's some of there. competitive guidance of to I revenue have Ground bit, seems to weaker, a perhaps bit both bit a terms little assumptions like So but are changing and helping. like dynamics Could Brie, feels more maybe into there. that for

Yes, absolutely. question. Fair

within the as but the quarter, good I really how feel So just executed about help. macro we mentioned, we not did did

than whole As from parcel domestic year the anticipated a little will total look full for for down we calendar year. X.X% about at be year. the 'XX, bit market we're you year total That's lower for thinking about the if specifically a volume perspective,

is the the the hard great of to things. share adjusted. work -- year. in that's versus a growing the down doing a look and get to helping X.X% Europe. international, have yield is took But of so said, not So I is They have really macro, Trade grow previous we to again, Like at kind we I executed. couple job. When at market team team the we the to X.X%, when

the they're retailer's inventory. As have -- of of extra in They're that at a carrying good a lot I perspective, job. place we inventory, pretty this are, a a but not retailers in think look not you then the capacity to to us. And look it's from back back. if help is capacity capacity net pre-COVID takeaway out at a is Asia, perspective, going that of while inventory Trans-Atlantic levels. in packs good Wholesalers that packs from done a And not coming extra total lot is restocking is

don't see to see That We demand boost, inventories us outlook we going that note we're reflected range. in a really the So helping. work so don't important is it's and trade being think revised huge this giving I sort to of already execute. really hard to said,

despite we macro little for raised so a good. softer, the bit midpoint fact is And that the really the

revenue sign X, X. formula top catchy of of X, X% me X, but you X, that I add say the performance. Jack. Thank just raised X, range lower in for despite quite fact, of time better Brie we point X, even range well. to X. DRIVE fact the it's not the a can that expectations, It's for gave it's the simple bottom important the revenue as minus Jack, X, the just X% have and the growth question, you on for now the a bottom let actually we really on call, is working. I of last line. we a Last mentioned, -- the all our that's This as execution

Tom will come from with question Wadewitz next UBS. The

came So a in that that momentum Ground over maybe you on a if still from think that how very probably of driving margin we volume, performance? about what And side wanted margin? happens should result Ground, Congratulations volume you softer? Ground margin Ground if on volume ask going to the little performance. a particularly impressive forward. diversion, good much think how I on was the would that we little about is at lot UPS. of a bit momentum we And margin Kind expect factor lose some in from a this

basis. in quality, in resulted John. which is this revenue X% substantial in also Yes. in QX, for a year-over-year boost anticipate year-over-year, on which excluding Tom, surcharges, Thanks fuel question. QX, demonstrated we year-over-year yields improvement Look, margins helped improvement on that we're focusing continued and up QX solid margins. in we've Also,

I revenue do And continue this to doing best great keep identifying it. we a quality got Brie think want we'll so. business the job mentioned, and those as opportunities team is and we with the to

So thanks for question. the

The next Goldman question come from will Sachs. with Jordan Alliger

Ground upcoming or what the quarters in Express in targeted second X, aggregate the expected Just and look curious, cost of maybe you've bit quarter, You this what a about expect be of about talked saves from can whether that talk areas tease you saves, we maybe DRIVE? cost can more little worked and it quarter, could but some up things you sort on the some here, of to? could we the forward

Jordan. you, Thank

with initiatives. off, for executing a and working the company color here. thing accountability lot of this are a rigor, with will of a just a one way it's It's John it delighted Let me way and DRIVE. measurement. lot turn of then I'm we against It's inside not are I and the any additional changing of start to we series lot

had we with an internal DRIVE and with I much have week, stakeholders. last meeting numbers. not fact, real all In energetic the seen conversation

expect confidence. lot -- me as one of the is in -- but continue at the look to execution that's perform of the DRIVE, really which we've to activity, the a the The go first we forward. competitive obviously, that the quarter, got if the we bigger issue we benefit some have momentum of of one quarter you gives So from first

give me that. it John on to more color let to So some give

come It's that the such coming point, extraordinary see reaching everywhere together echo I And the the to for remarks, we're really in our in Raj's one of most as Raj, the this of everything with things the impressed Thanks, plan. and and project And program I around that from you -- my said to goal it's confident really our Yes. year. in accountability is that the $X.X organization. in billion the rigor I'm said.

One of of the used we examples the example Ground. was

referenced we our only some I helped was significant not bidding a system. us system, efficient think and the it I bidding which to savings, tools, referenced. $XXX more which of million and more technology because revenue The reason also adopted basis the it that allowed us capture because

it's leveraging everything, technology operational and market. of going combination So after execution, a the

you. thank So

The come Group from Scott question Research. will Wolfe next with

how in continue would the Ground DRIVE just rest know sequential QX? color year-over-year margins far? so $X.X of and across for to QX. business on of margins then billion I said you've the any at John, improve much gotten you Any And of Ground the thoughts

Yes. and you Yes. to spread expect DRIVE, that evenly to Thanks, talk fairly to exceptional to we're good year. be it had we reasonably an again. regard -- We the billion, through $X.X With QX. We're that Scott, through programs their QX, slightly ratchet get year in traction up year. maybe in the of to heavily back these the loaded and half continue to results start the show to as of the expecting out some

So again, and It's evenly X I changes there's going any won't say -- quarter. sit to dramatic spread. for fairly any I'm here not

question will from Wetherbee Citigroup. next come Chris The with

just outlined segments, about the on up million little the that from that, savings $XXX a guess. be the sort was follow in would the wanted other you and realized to Can I and think then bit to Express And bigger guidance just that Freight helpful. you John, there, picture. outline DRIVE the Ground, of what

puts macro big maybe to of guidance UPS kind of piece to on before you hold like bit? a expect moving of of and then that adding takes kind maybe in competitive the a us XXX,XXX you Yellow into to were day and or that captured that where can standpoint. But from packages sounds some up from per to the what to through the want of help walk you you midpoint bridge on a to hold it the you're there of little and So

lower that estimate. things million yield as we going group really than Sure. are to But strong of that well outlook control flight as And But focus quarter, for the that we more as market. Also we're not variable that me. embedded for a full year. is With the offsets It to our amid on it mentioned, incremental puts exactly the the really of example, approach on for Not playing achieve there executions some billion on is for job at year nice That's our those largely does the and listing aggregate, progresses. posted and as will by prior a taking able of raise pleased quarter I'm there increased market. seeing we're well, some guidance $XXX a strong be revised we regard down reflect as continued achieving to where, are the of specifically will guidance, going even will in is and schedules, I and out a that We committed $XXX in be focus the to and can we the organization. the we aircraft was $X.X soft our million in really took year. With expected. keep but every soft from regard we're Things as the the is say what to to the Yes, a the uncertainty, we'll you was it But be were a aspect first, for the DRIVE savings. UPS range, enjoyed the upside But coming and and day, Express Brie end restructurings, when pressure to recognize market. look, to think highlighted Yellow. in the flight the have from takes. balance for doing been this Ground. we're some soft only thoughtful a There guidance. have delighted year. I there through we of end compensation

next question Brian come Ossenbeck JPMorgan. with will The from

negotiation. angle you seen and we've ask higher. contract reset these of I to even Teamsters higher get the in expected. lot in union contracts This wanted about for Obviously, another the guys benefits came a comp of it and logistics, reset think Just one than bar

they with there's now you board do deal what was So look reset the think the segments you reality across a across a the as from catch-up in your perspective market? cost as various in

Yes. Brian. Thank you,

in real step of models our annually the we to a what will exactly and be $X market conditions increased may compensation we it's in As FY are would you billion. while know our that. or increase, see have that and to And time. knew competition I dealing that change, you And 'XX, all recall about we given, with invest reflects happened. a majority we in people. in we market. continue delivery know X the pickup That's also, we And our taken a have outlook mean,

to of great members In remember also our structure. culture overall which offers our compensation have value career a that collaborative working other among beyond at are important things. and merit great compensation, our fact, proposition, FedEx It's team increases, we opportunities, overall October, a coming important regular offers in up component a annual and

So we question. staying it's your of of and we very all for it you. important issue right of top and appreciate for Thank are on all us, us,

question Poliniak will from Allison Fargo. next with come Wells The

mentioned your you the upcoming peak season, opening season peak in Raj, remarks.

your environment, quality revenue Just colors at approach any such. changed your of peak given approach this the to sort dynamic and disciplined all? there. season to Has Just

the question, and really The the is our I in we networks year. and we support than are where I probably that more this just is service any no customers are well, of you -- team running we is most sort last add strong. our today our Allison. were seasonality it There the now And seeing approach really say for there to year-over-year other expect you want said. to season. to is to volumes And the comparable if would know important difference Thank I is versus peak ready than say, just Brie, don't normal during season, to very

Raj. No,

perspective, that's feel We is really include committed important good for from in strategy, important it's think our time We the a about you customers. pricing time think us, important. This for invest peak. surcharges. to does a need really strategy it. which to We really a but also we're network. covered peak And I year our of

deliver in we'll to see we wind And January network, surcharge down flex so major allows And that but us there then no having great service. it the change in strategy.

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

XX-year welcome. forward of working best been with It's great John, in a run. luck to Look Mickey, you. retirement. And

wrap margins you a we're parked at leverage are X% reason talked Street, target of given gains there Express, about to walk $X.XX, moves particularly $X.XX I of about job margins? at the in you've some seeing million. Express, overall rest at is softening raising million know the results timing through particular? And $XXX cost and on it the not given the on guess at any in some but Just that the like beat bottom year in But talked about? the aircraft of more made had Ground. up, and quarter versus with yet the the you're in the prior -- change gains maybe by structural $XXX Maybe of the great I at talked you the you Express the

So slimmer looking that at I'm just other areas. in margins wondering if you're there's some maybe

and Well, to again, say John start me let here. what can off, add I'd

for I think that this in to some headwinds it's Express important key of facing the remember we're quarter.

surcharges demand declined the Firstly, year-over-year. substantially

decline. also and yields up of International reopening Economy International the opened in We resulted Economy

also And of from market-driven the the earlier have number talk that from headwinds as we volumes strategy. the USPS have fuel at back their we in prices. three. then time, That's same mentioned declined As part also

$X.X it that, all decline of net revenue a billion. was So of

was John. become start all earnings the working opportunity improved variable In that again, hard teams environment And headwinds, in that. and better lower And and turn lap numbers. comment remains addition environment. even and a we I'll Express given is ability being demand then DRIVE are demand in there. actually just a Despite capture what's the our compensation as DRIVE to there's tremendous working. also these profit, to to and financial projections, drive I'll again, progress we this a even that, our me. encouraging to increase make are our environment really uncertain, for on forecast is quick once will think in it we to and over to increased visible results The the the more prudent that, we And

are leverage more environment changes the and there's significant Now on that. we Obviously, positive.

you So to to anything John, add it? if want

continuous that on I yet you. said, be is Express to to exceptional. But think Raj, to it. turn improvement. We're on guidance, profit those markets. it. we're were Raj the the And We're Thank improving focusing captured yes, and focusing they on headwinds All initiatives that focusing going improvement faced, you've covered the keep those I year-over-year significant really No, the going margins. DRIVE going be a to to think, be on able

with Deutsche The next question will Bank. Mehrotra come from Amit

may moderates that guess there it diversion I wondering Ground $XXX explain consider any now the throughout some opportunity? looking there why I'm I that in just can we you strong. think that's Can -- would go was it's in that? a wondering month the the quarter. million to and decrementals on wondering as but queue, cost plus that on if because just went the volume there so sounds the and that maybe the wondering related anything confirm step-up just cadence ringfence I clarifying just -- I the on And sequentially of you you would Express of incredibly just at to Express, that is August is comp. from to John, on kind get like I high. due incentive volume Congrats obviously, guess onetime were the I'm back. And I it sequentially shift in that guess was X there structure. performance,

that. If you clarify can just

I last report, was time reported the think million on what I to $XXX last our it. said we incremental from

at to -- regard fact, we that's to regard well a on Freight going with With no as customers. And to anything, at incremental market that have margin expecting not in from ringfence look, ringfencing I customers basis of least to business terms on we're we we has have back the short and on for have capacity, identify. a So exactly come as the the be volumes. be talked going year-over-year margin Express, of keep getting we're think the while Brie I in we're Freight that continue additional in With leverage with going just of continued But and that and improvement improvement advantage Express. taking require to your terms mentioned and year-over-year and to side as I'm are continuing focused and, going on to that agreements those expansion But just to very to now, is it. be on about, focusing discerning that on moment, looking expansion. a otherwise. Yellow, piece on perspective opportunities the is to the of ago, going be mean, out Ground sure we place question Ground, those to the grow for took we're

The next question will Susquehanna. come from Bascome with Majors

potentially as bit in where this haven't its little lot point? tool spring, of larger the and the and products from if about And a network some efficiencies? launching a FedEx parcel pricing in pricing This dynamic uses your space, Can U.S. before. talk carriers you competitor we competitive seen in which primary dynamic that the market landscape about at a has for domestic products evolved talked share

pleased Great the really actually we're making. Sure. with We're that question. progress

more the dynamic around Where to DataWorks building currently price great be this is a surcharges are we platform with we Our made more world pricing to now peak are along able our team have to capability dynamically. -- using dynamic.

road excited that don't have more to visible don't I we're in long some kind that airfreight as products are that capacity map in certainly to. the going match to we're provide to much we're starting to using about using to to I want market, admit, want drive our But very because that capability I I than market well a of domestically quality. to really to we already that bring backhauling. We've that intelligence pricing spot need great use competitive share of as to a don't market we're revenue any have what's things got We in

from question Vernon Bernstein. with will next David The come

basis? in question things there I'm popping feel cost number piece about structure and look the out where more just quarter. terms full in year. And kind sense we little that that circus. the drivers welcome in additional running if per piece trying Mickey, the a $XX.XX, are $XX.XX at surprise. per on a year? the for congratulations. How be cost Quick the is to for should absolute the a that about $XX.XX in talk of segment. of ] that cost be bit be ] [ to should the you as you for we sort expecting John, range? [ of Ground rest sequentially could the at The of of on we big kind going Are a this we to get Should

which you haul. renegotiated wondering is in You haul thing, kind rates year. rest bunch truck a of if which should I'm mentioned just of down line of sticky -- line market, that to going for a the be the

reverse So take order. in that I'll

as focused productivity. last touched dock Freight that's just and rates productivity, and I across mentioned the to on, on that's settlement as on. will But as first it prepared my to we that going board environment, true continue rate at on, well. true taking, goes wage we're measures And and line things the and the forecast. our Express with yes, into Ground, with And remain at the remarks. On DRIVE, we in our be mentioned regard haul time it's with and Again, to the update to mile consistent remarks. haul, higher that's And in line expecting across we're all focused so board Raj factored and

The next question will come from Brandon Oglenski Barclays. with

tailoring the you wanted Eric Network through mentioned I to continually and is to This welcome go process. you're on on to Congrats Morgan Mickey John. Brandon. ask as for and Raj, this you learning X.X. network

on know right the what can co-locating when us it's you Express wrong Ground and so give market And in how better on those to has variables far decisions, with trying employee by and understand Just So service could some maybe considering us the I some confident and execution? you into provider what market, insight strategy terminals? gone you decisions? give but are there making you're the color

our Things by Network are question. of fiscal are Well, feel going 'XX. thank we to you on our for we commitment year track as complete X.X the well quite

people. going other Canada, that locations the learning as have a have mean, our have we have Lower know provider each And principle this in are we the will to operations As we use several be changes definitely Alaska, service and technology, straightforward, you -- And lot implemented again, we tailored it's we in data-driven to the for of delivery optimization we the facilities, we announced Hawaii, know PSP XX. as follow and market. know, philosophy. And well to important and is it's I to both in and/or they pickup the courier note model characteristics pretty to it's going continue process.

X.X. we this forward. next wave And rollout good. peak, the so putting place of as move So, are And announce again, so of post in far, Network we'll all we

next question TD come from Helane with The Cowen. will Becker

John, congratulations. board. on welcome Mickey,

wondering is automotive of so the on, #X I how in know current a if I'm doing part you're question about is my you're And targeted of mitigating your kind there. vertical, So thinking automotive of about that, you the strikes. thinking big verticals. UAW and one is these your quarter, big can impact the any how parts out and impact help

fair a we're but in United Yes, healthy here question. business it's States also have highly in diversified. a We around world, the and do automotive the

in economy accounted the that benefit -- within and we've have from the we a Right our at for entire have believe but accounted be, looked We in would We accounted in demand it. rolling resolution both current fast so and anticipate some will demand now, some obviously outlook. current strikes, that do for automotive. there we initial forecast we for for the certain have locations, fluctuations our that numbers, and FedEx

from next with Bruce question The Stifel. will Chan come

I both. go FedEx to having you make to regard FedEx that value of maybe you initiative? superior you've capture you service and given yield with faster? X.X maybe some a guidance Mickey, the that beyond do prop Brie, John, think if so, the And congrats opportunity talked Does that back something about, If even more could to Network that opens goes speed. around

X.X my wouldn't pickup, actually I opening this. I'm Network perspective, is really a this excited that in a mentioned about perspective. and piece remarks from underestimate Service The from So just FedEx I

one, collapse just from the it known how customers much physical a to automate talked -- opportunity but that on experience, as is the in the enthusiasm make And long the in when was of have easier we market, it Raj U.S. pickup We streamlined we knew pickup some also fashion. and rationalize not this manage opportunity. the the pickups an learnings and more will an our but pricing was we about we there, early will

a better lot Network it's network opportunities it's continue iterate. X.X but we found network not So the we found to respond not -- to bring experience. To a do yet to up a easier What from together. in we them have as we perspective, customer speed is adapt date, we have and the

especially for, also something care. And so space that in customers have the has that and been health asked BXB

are customers very the Network is are X.X. but and supportive learning takeaway a we excited net So about actually lot,

from next Stanley. Morgan question come with will Shanker The Ravi

Mickey, follow-up years. Brie, and the for one thanks good you. just quick the luck help for over

I of been rate and the so said You was like historically, it's rate you're far, traction of good a base converting What to amount that pricing decent What rational. environment pretty have remains saw increase. percentage closer XX%. that? USPS. pretty But pricing and the that said U.S. pricing surcharges the you also, post And say they're the basically now? not you right converting you to any are going office think

So on call. the the were changes noted UPS

across be Do you Amazon think the I think a as industry? pricing-wise well. service launching environment is competitive tougher XXXX some could

got Okay, a that think it, it I all. get Jump was in I if don't lot. I But Ravi. here

the we the are rate. very go the perspective, our but prenegotiated service guide the customers full January, that excluding customers the already from our majority of vast get if we So is a a GRI. That customers pay is we've where on to GRI answer back terms, last large high capture

that surge anticipate see structure and the target we we From peak flex. same think so surcharge to understand a the thing will that drive to important network perspective, we that And volume to coming surcharge January. our will really it's really peak I this

the because to doesn't enough surcharge. So majority of up our a just vast qualify customers peak surcharge the their peak pay do for not volume actually flex

and And prenegotiated we're so is to relevant of we've good. actually competitive surcharge I about doing vast think them. I'm continue pay And what majority those we don't actually peak look the so from with peak particularly surcharges when a feel that that not also the worried in environment, customers USPS'

seriously, last then customers, important So think about Amazon, really provider remember, heading I peak. And fact I'm to they value provide making who worry chain we've XXXX best that Amazon when to to a an in years and or we building the day We focused got about feel our that win, we every for And customers. think we've better even you good with XX the our to I network and of with very do when I they the taken the into spent proposition. have think, think Ship the world. compete don't a is supply win, them. in thinking about up than with really about planned transportation it's you and get And market for going value really on months. I excited better nothing some other sharing that continuing things I'm couple competition

question. for Ravi, good. feel Thanks, I So the

The next with from will question come Stephanie Jefferies. Moore

in Freight mix, volumes, bit the on Freight the with seeing you're I of disruption the probably of be for But August. helpful how market, some gave you a that the in fits you little given context? about FedEx's talk kind just color just and just would appreciate what current the those major segment diverted can mix

to answer Happy question. Sure. that

So directly take, give came Yellow reason to I Actually, it. day. Yellow when so a low-quality at volume a of X,XXX that talk And if revenue. is it on, important came of from split we that think about had customers, it's the about being look or both, half lot you pieces the

pay quality it and there fee didn't needed revenue provide. more for was not what Freight some however, was the And of that volume took What and happened, service really Yellow and some to to customers on was we want the competitors value be. their FedEx that some there the so

we confident and are is am the well. to a takeaway keep that sales pleased margin team network that X,XXX as additional disciplined, will I market. Net that's running Lance and that, result, of we've the X,XXX got very, so And volume from is healthy. really an very was the The and was with both very I of planned incredibly do. that the And what the pieces we and went majority

And will from our Kauffman last Partners. Research Vertical today Jeff with question come

down you. John, back of John. congratulations, a all thank Ken these the was looked earnings great earnings with midpoint. $X.XX But so about went guidance. on unadjusted clarify went And to working I you, Hoexter and asking the The reasons and at it for Mickey, why. I highlighted about the just adjusted midpoint kind And wanted you it's up, like you question guess, the at $X.XX been and years, go the what

You to took about to the the the bit. And comp. high million of end a down low talked $XXX end of I the understand, $XX.XX want incremental little and up range you just incentive

talked pressure. yield some the of You about continued

from it like You that the you also range the $XXX about for extended adjustment costs about of talked some $XXX And business million to million. looked I then negatives. the up saw optimization

midpoint? $X.XX So adjusted net in at that the reduction between the the increase is that explains $X.XX the the difference in unadjusted guidance and the guidance the

Jeff, Yes, correct. that's

right. that have You

Mr. conference ahead, closing sir. any session. question-and-answer Raj for the back go would turn like Subramaniam to our Please I concludes to over This remarks.

Thank you very much, operator.

that in I to strong our for Let the me start such proud say how of year. team am a closing delivering

work, Thank structural the remain attention you enabling efficient today. changing of make continued intelligent FedEx and we continue proven cost we transformation customers. execution see flexible, every peak, we're for We've we build for your reductions on and way for next you track, experience will will world's that and as the to Our time. DRIVE network. the FedEx across outstanding as is I most our prepare we

for presentation. Thank attending you today's conference now has The concluded.

You may now disconnect.