FedEx (FDX) 19 Dec 242025 Q2 Earnings call transcript

Good day, and welcome to the FedEx Fiscal Year 2025 Second Quarter Earnings Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Jeni Hollander, Vice President of Investor Relations. ahead. go Please

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

The results investors.fedex.com. freight and release, being second earnings quarter website. our assessment the slides are our streamed from and stat on release, website call at This accompanying are book XX-Q Form

our callers participate. limited will During to allow to to question Q&A would accommodate to like session, us all be X those who

Act Private that of and considered in Such forward-looking may statements, or Securities such statements. this Litigation differ in defined other actual implied statements are Reform Certain statements forward-looking expressed to be the XXXX. uncertainties forward-looking from subject could conference as risks, those materially by results call to cause factors

and the filings For with refer information additional these releases factors, SEC. on please press to our

measures. on for of a the call of to non-GAAP also Investor the presentation discussed portion reconciliation most fedex.com comparable certain measures. includes measures our this Today's at financial Please refer website GAAP to directly non-GAAP financial the Relations

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

I to will over Raj. turn Now the call

Jeni. Thanks,

in want the transformation. step members as in marks are outstanding we and our by to and I stretch team important of thanking an our We for for begin work our peak, season hard holiday their home dedication Today an deliver customers.

we in industry-leading this Following we decided of business, back X result and June, pursue have will public in assessment a our FedEx which separation which Freight, to commenced companies. full of announced

between focus to commercial, enable stockholders will operational value benefit separation will companies continued also while for we from both separation, Through The believe for we significant competitiveness. enhanced businesses. the and and technological cooperation both allowing unlock

company preserving to while ensure will independent to and benefits return Freight long-standing be shareholders. while flexibility to profitable enjoy the strong near- growth well continuing this in priorities invest connectivity. with FedEx, from execution Each their will capitalized, longer-term FedEx our strategic and of For capital

would starting FedEx compelling revenue overview a of to LTL relationships fastest to on has both of network with businesses, FedEx Freight like customers, by with turn We're largest with to leading broadest who provide times. for us choice the excited the services. the I and carrier the a reliability, transit brief deep Freight. pure-play, simplicity value our proposition create and

quality operational last for this points. The Freight go-forward to increased basis time position team's margin operating X,XXX revenue and balance has strong average factors its nearly utilization, expanding driven approximately operating performance, on share a XX% the efficiency and by has maintained will focus continue strategy, and market these X leading on by profit per year sheet. long years, facility safety, Freight's supported a guide over

begun more Sales new potential. its of value Areas VP LTL to specialists separation. time led the As Tom to be we than company, nearly already and first, opportunity better the LTL dedicated by Connolly, team, positioned XXX expect will separate years we of build We've unlock full to greatest a out experience. add of where sales XX include: this by with force, our expanded see an Freight LTL

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efficiency an our spend. vendor will network coverage, FedEx lowering and Freight serve. drive and improved to touches which on and cost LTL-focused Third, efficiencies, outside automation, reduce improving speed, fourth, focused optimizing accelerating And

the positioned the of economy both dynamics which portfolio benefit also and industry. shaping is market from Freight's long-term to services, includes solutions, FedEx LTL priority well

execute to seamless ensure FedEx on President we or serve as Moll the experience the Freight as our To As of will sustaining separation, and remain focus to will service pursue we by Lance we on customer transition, focused continue our improving separation. customers.

Freight FedEx and continue relationship. and agreements The and will existing the of to capture continuity commercial, cooperation service from and between operational enable benefits through FedEx technology seamless data long-standing

customer value separate customers, to services. will seamless turn an X FedEx those for have that especially We a all proposition. for companies, collaboration With unmatched transition we our that ensure creates X commercial

network Freight operational including mentioned an perspective, peak via Express From earlier, agreements. for haul drayage supporting provide Federal benefit and a requires continue season addition in receives direct minimal This to to will FedEx efficiencies change the I line strategically, from financial Freight Tricolor, intercompany support. as already

agreements businesses, and tech service as agreements, with transition beyond. we these connect implement to business the that and ensure facilitate Through X needed, provide Freight community. shared will Additionally, technology FedEx and will platforms the effectively

and to this company name. have maintaining of access together, plan the to continue FedEx brand, speed familiarity reputation strong superior come and will of Services. our they we continue from under also to the operate Putting global all the customers the new of coverage ecosystem while Given Freight enjoy unparalleled expect for service, FedEx Freight the to FedEx to

Express transportation breadth coverage. industry XX over years us the and enabled the ago today. of choose pioneered remained and We value Customers our for advantaged our leader FedEx. to speed service, industry turning proposition, Now by

each X consumers. We We XX% world's GDP. the than XXX $X XXX day deliver goods worth of of transport trillion We packages over year by million more million business to link million nearly XX shippers every approximately connecting tertiaries. countries to and

our the at own customers progress efficiently, supply continue customers thrive The petabyte and confidence competitive our provide over insights stand-alone which X chains. day, how weekend serve our of company advantage. that drive every U.S., manage ongoing we also and rural will gives us their me this single business FedEx coverage And more serve our into run we future. we how to data that generate the In how

focus supply to work. continue leadership through our our to DRIVE, to best initiatives, During includes are which separation, transportation cementing will delivering stockholders way strategic we as world's on chain the significant This and the which company. change post position continues we technology value and

baseline. FY We on the by in savings deliver to 'XX 'XX are track FY of end versus billion $X the

efficient where positions we billion promise efficiency facilities, global consolidated network, $X along will targeting end growth air of for savings Network one and while the asset the strategic Tricolor, the of us by the on our redesign are deliver 'XX. network, more of which system. neighborhood, which entire FedEx one in X.X, improving with of utilization FY truck, a the including

As proposition on leading technology service with strengthen an a its continuing higher-yielding separate smarter FedEx to our outstanding value chains all. in create for provide and segments emphasis company, on offering premium service, delivering focused ecosystem will differentiated on to and supply building a remaining

priorities Our remain capital unchanged. allocation

maintaining We strong investment-grade balance profile. and sheet will prioritize a

intensity, make and buybacks returns stockholder We to high-return will and investments dividends. the continue increasing business through capital while reducing in

spent will approximately XX bringing office, Claude and operations. use execute separation Russ that the DRIVE management XX nearly we months. to lead within our Looking ahead, we Claude to expect the rigor our accountability separation run has the been at of currently our as well-versed has of Finance CFO Freight, and Claude Enterprise former business DRIVE critical and years dynamics. enabler is our in FedEx market of VP FedEx execution. the is the a Freight LTL

of our we plans. the shared and assessment have Today, outcome initial the

continue new allocation; FedEx operational from our profitable details milestones strategic this competitiveness on full you growth. separation will and flexible pursuit and leaders: we capital X and will to continued result well-capitalized which keep we share, separation industry to strategic benefit executing updated. strong, initiatives in Freight, and As well have positioned will more in of FedEx, Upon completion, sustainable

with Freight long-term this at right clear FedEx and to separation point the evolution, path the FedEx decision create value. is for strategic a our confident stockholder in We're ahead significant

as Importantly, customers, business our forward seamless usual it's transition. our for to and employees as we a look

Purple on we while We and the deliver are continuing to it used do to Promise will navigating single day. change, every

turning results. Now our to QX

Postal flat revenue. to despite Service this DRIVE and essentially identified, headwinds we shift clearly bottom We and improvement, profit with across including have Looking demand delivered that is adjusted flow-through working. timing transformation well adjusted results XX% achieved the the the of savings year-over-year Express challenging the evidence contract Cyber and environment in This line, operating At expiration we basis up enterprise, we previously Federal is on did greater profit. Week. operating both sequential as our a as on strong the Corporation, U.S.

LTL industrial experienced our we to Similar economy, U.S. particularly affected which the the volumes, in in negatively and weakness markets. quarter, the domestic package last BXB

second Freight industrial business economy the XX% revenues year-over-year business, of package and we pressure, on when XX% Continued market BXB our in comprising the are coupled recovers. LTL nearly weighed our our growth comparisons, with of difficult With quarter. profitable well segment for positioned

of Against this our 'XX. efficient we flexible, backdrop market dynamics, QX. $XXX evolving targeted in intelligent we and deliver savings in in savings incremental for support deliver and we a create We of will in We confident that million DRIVE continue achieved more FY as our billion $X.X customers. FedEx remain to

early in integration Our be 'XX. rollout and Canadian complete Network X.X market will continued, calendar year the largely

matching U.S. capacity daytime strategically costs, Service the of At packages as the service the of other the Postal demand expiration efficiently. and we reduce for our U.S. to domestic to hours contract, needed, customers. and flexing XX% we're we transport September, delivered With associated and reduced strictly nearly our began by more with solid end flight network,

and between our condensed our always period navigating is pleased especially peak. during teams priority are important This very how I'm with Christmas. Thanksgiving a and

while average time peak, the the that packages the this high-quality during day expect, in they're U.S. ground on experience X average shipping in peak. at far our per maintaining delivering customers So more with days transit

reduce we remain control, is half our executing fiscal what As the initiatives, year, to serve to against our improved drive our cost and to performance. we second transformation look of the focused within on

However, the for our will of 'XX. amid FY We assumptions environment, on continued now $XX. outlook underlying $XX we adjusted shortly. expectations range expect to uncertainty more are color John around the updating provide EPS demand an

make, much past at Turning On a enterprise, cycle cost data that across rigor talked every to more. and efficiency optimization. evolved so to has our to that program. be DRIVE how reality work optimization of entire to our we and within has and It's decision I've DRIVE more DRIVE. introducing FedEx, leading changed a we The is structural architecture technology-driven accountability earnings about new calls, business continuous

by fiscal total year. of we where to the achieve the Europe, savings million $XXX end Take in expect DRIVE

the team. operator many European wins. business. achieved FedEx, a the we Europe, In Our a are spirit hub-and-sort we U.S. senior have business is summer, predominantly recent European of bringing U.S. our and ground-based leadership service from practices to introduced including One from We new best over

confidence improved in This Our us growth, with revenue Europe's longer-term near- this progress trajectory. benefits, performance to quarter. combined gives includes and lead the which, DRIVE

Our ability view network, now European starts have region. in the better data Having the our cost of and efficiency insights to we European to financial using increase with implemented performance these a technology. assets platform, common to a enhance business our of serve

improved This improving only not better reduced leading productivity, enhanced of but on touches example, is For expediting via the packages. to Europe data number routing with also the flow, clearance, we our in service. intra-European

in hub This by new captures Gaulle We also and dimensions package processes. enhancement, surcharges applicable de Paris. dimensional at and introduced technology, pricing integrates seamlessly then our Charles weight, via and updated enabled and applies standardized

we are Together accurately translating next year. to with prime As for a an dimensions. $XX packages example capability non-stackable outcomes. especially million more of European goods we FY over a We'll is shipment benefit and the income business this out architecture transport, now the for operating compensated financial initiative we This of with and result, facilities over surcharges, to other continue expect the into to this improved 'XX. operational deliver unique in new better our higher-margin roll

financial our entire efficiently by Europe priority deliver Looking Improving ahead confident right enhance to remains and and encouraged experience the and ahead. leadership this opportunity for and in the in a deploying recent I'm customer experience network effectively. I'm team our proposition focused design, right progress, that digital the very the tools on our processes team. the performance across Europe, the top is value

for modernization the we improving while the an a October, employees In This in time celebrated for work at increasing our World of our milestone our of sorting state-of-the-art sorting peak, new important grand our facility for experience in new Memphis efficiency and service just opening facility customers Hub. the our marks efforts, hub.

are continuing in which QX, select Tricolor, have stations across We and to strategy, optimized also And of out markets X.X is in asset to first design utilization improving we network execute Network now half on and the targeting while roll international enterprise growth. air the we our date. to density profitable continue XXX

I peak every through experience They peak the thank team Before well again I us make our positioning as want the approach beyond. of FedEx once close, end FedEx and season. to outstanding, we

Now the Brie. turn me call to over let

for service XX U.S. for second solid economy. supported U.S. quarter, history. Thank conditions has indicated a weak months, industrial innovative proposition of but you, the performance declined value our X% Market Raj. remain the downturn in XX and out QX the by representing our manufacturing season. the driven soft, contraction and a PMI in longest past positioned peak Consolidated have levels, us unique successful revenue offerings well

each by was across We basis revenue declined year-over-year saw were yields Reviewing services Federal volumes, flat. Express, segment now. our our year-over-year. which for increased Higher demand a on essentially At again lower-yielding partially offset services.

by of increase majority demand shift the with shift Delivery Economy, driven between was but trade-down a not demand to Some services. to to related in organic this preferences, due was from customer the Ground Home particularly and

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international economy to expected, due lower parcel shipment. yield mix and As per declined weight

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revenue is through for will project pricing this the are that supporting third quarter. surcharge We of confident significant year-over-year. I the am and this season a strategy revenue profit and over peak be part the demand expectations up

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We commercial in particularly strong continue see to Europe. traction,

shipments improvement. revenue the At average and softness Freight, modest half to second FedEx in decline slightly anticipate we to yield due continued in daily

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to business forward. moving For unrivaled is their our our partner in be mission their customers,

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We fiscal have provide created 'XX. in benefit early and to an expect automotive new year vertical

continue our and domestic which to delivery, proof second the drive ahead. to the to market's close years growth coverage XX% in Our E-commerce mention e-commerce U.S. business. us the incremental Not gives Within of services, is continues superior a ground speed market. new parcel FedEx picture U.S. of competitive help priority will our advantage.

our improved will incremental will these X.X, from to Network execute which cost we lower volumes. flow-through As continue to we lead on to serve,

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market. to winning in condition necessary and this a is strategy competing Tricolor Our

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Fourth continue European years parcel grow market is the and will is ahead. The roughly to in Europe. billion $XXX

majority of with the revenue already from Our mix Europe coming in favorable is BXB.

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segment, to target the of management growing Regardless quality capacity critical and are revenue profitably.

capture A over yield million of benefit in new image progress years. This surcharges of generating tremendous are is a made nonstandard $XXX AI significant have in the example, year-over-year the a several last total We annualized. capture great process. result

XXXX, the calendar In work we an will is Within twin system. our capacity on globally. of the network. have there real-time a capacity year fdx, We now accelerate network's of end-to-end view management digital

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And I'll with to turn over it John. that,

grew by X%. revenue segment, growth to declining Federal and soft driven share Thank $XXX demonstrates year-over-year, performance by our per profit our results QX actions we conditions, approximately and lower achieved our sequentially adjusted earnings operating these with the primarily cost strong you, and team's commercial despite adjusted serve. execution Brie. to our million Despite increased Express We market the

the dynamics operating coupled resulting of months the of headwind. additional the expiration negatively through Postal quarter, quarter, our the affected constrained environment, X contract Service in the pricing economy, The results. competitive profit soft global Walking industrial with

and DRIVE offset associated benefits with adjusted consolidated However, on headwinds costs year-over-year $XXX our earnings our this to are supported expiration remove these contract of growth. million track. plans

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the and DRIVE, $XXX million we adding Surface Moving back-office versus as international, million cost offerings. in $XXX spend. and our million we maximize quarter. were outside $XXX as from third-party service million planned, total we quarter and to savings savings vendor of of optimize rail and to to quarter QX $XXX we G&A our significant sequential which delivered the air savings lever reduce network achieved as functions usage, deferred lowers IT the on improvement the in a And to our continued a continue in QX. in in serve savings benefited QX

expect sequential build half DRIVE As fiscal XXXX, we the and of encouraged seeing to base to we're a look we're yields. savings, back trends by continue we in in the

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prior of to the result, $XX a we $XX compared outlook range $XX are As diluted our $XX. 'XX FY to EPS to adjusted revising to

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earnings Express, the expected about. year, flow-through for line ramping half and fiscal Regarding QX that the anticipate peak continued the Brie Federal savings, quality second Cyber top of cadence DRIVE we of Week, encouraging at actions will benefit timing revenue the from improved talked demand our due to

reminder, exit year. headwind QX as Service the in to fiscal Postal as we benefit and headwind the the expected timing the will However, Postal of more a offset And shift. in lessen increase QX Cyber is QX Service the Week will than

to We expect U.S. softness of and to savings full continue industrial anticipate economy total billion. remainder in continued a $X.X DRIVE to QX, year profit and with incrementally QX fuel the build we prices for At FedEx 'XX. pressure a lower Freight, of op in FY the

our typically quarter year. our strongest the of is earnings Finally, fourth quarter

continue X despite We expect in QX. to dynamic this day fewer operating having

now to which adjusted profit to EPS. bridge billion, turn operating $XX.XX now adjusted our equivalent embedded operating year-over-year reflects $X.X in shows our income I'd revised the full to latest operating outlook. bridge, This of profit like elements year of adjusted

headwind we headwind we pressures. million cost, a expect last the $XXX revenue FY reflects inflationary our quarter. assumption compared both $XXX of assumptions lower and continued 'XX to net revenue, shared million now For This

we lastly, Postal expiration. headwind same contract in million We $XXX QX X anticipate execution now headwind of $XXX the the revenue that a X on about million international initiatives which is estimate. that U.S. still was a is $XXX X Service million we a and expect QX. a improvement from headwind fewer This forecast At And yield will to export the prior internationally. from be $XXX compared pressure, an days, operating time, million quality our in result from

our the general rate quality this price 'XX in is confident from our our to fuel peak increase, remain DRIVE offset these by headwinds recent to revised $X.X months. as outlook table continued billion We in Further commitment incremental with year announced supporting revenue and ability evidenced calendar surcharges savings. changes

expansion year, continue and adjusted challenging industrial the to operating For contraction at production environment. FedEx operating Express the margin expect year-over-year margin given Freight at Federal full we

positioned further industrial revenue. the of our how that midpoint continue assuming business. DRIVE profitably grow approximately adjusted to revised the to business. to enable global I production e-commerce fundamentally improves. we expectation exists we changing margins do incremental on cost This remains see are outlook, way EPS improving highlights value significant with flat FY It to services we ensure well We're on know is and 'XX my X.X% priority the growth once At our unlock highest are us to our in that our priority structure

We intensity capital increasing to $XXX million. capital reducing remain expenditures committed to returns. Moving our QX, our allocation. capital In while approximately capital were

Our this planned continued $X.X adjusted of basis, flat CapEx which and into year-over-year flow. 'XX is cash billion, strong free remains translate FY will levels on a

ahead. support to QX, strong second our I share returns the grow an increased repurchases remain confident planned in $X while to year-to-date will in long-term ability repurchases adjusted We additional continuing years of additional completed $X and earnings billion near- which deliver in in million levels of free shareholder bringing flow, cash the for fiscal $XXX with total an to billion, the half.

up with questions. And it let's open for that,

And Wells first [Operator Chris Instructions]. with the from come Fargo. Wetherbee question will

Maybe I moment. could on guidance a the hit for just

in last what line the on you think I with second generally So quarter results call. guys the talked about at were least

dollar that's time about John, tempered. kind the back the get XQ you more the from think here. pressure that. little little industrial within I that or production cut kind break by of that things I So you XQ a maybe of year, the is Freight talked bit you guess, under dollar the curious half fiscal the the also think in about how sort cadence detail end some was little obviously of guess, a LTL Or about it of bit about weighted? year? the talk also Just help we more a I better weighted? of think a plays pieces and to context. It outlook I think how could Do know, then down and the moving get wanted it bit we of more out? the as to of bit coming the maybe about more how Is business to if

I Chris. the thanks, question. So appreciate

savings as DRIVE you actions that well factored as know, in So as implemented. our we prior pricing the guidance

volumes However, revenue and materialize. the just didn't expected related

adjusted the range, EPS expectations. revenue $XX, updated reflects is our to which in $XX revised Our

And you from DRIVE we guidance, that Brie we're talked continued quarterly of from demand. Week and quality about, talked timing revenue to a will ramping timing signs encouraging not standpoint, and Cyber from benefit peak savings, QX I we're while the our can top giving And that line about as tell actions. seeing flow-through due improved

remember offset QX. to USPS then the I headwind that benefit in and mentioned. QX, is just of Cyber the But expected important QX in for to lessen It's though, more that somewhat than will the increase Week headwind

We continue from dynamic that to build and of standpoint, QX. a traditionally to DRIVE to anticipate and QX the quarter we our in year, hold. expect incrementally savings earnings this is strongest QX And

even that's -- fewer true having So day. X operating and despite

So you perspective. hopefully, some that more gives

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

Obviously, Great. to spin. creation. is see in But my congrats value long anticipated on And the for question Freight a Brie. and great move

season kind mentioned talked and You a how of and focused into peak through? strong. to price guess, on volumes, that it's about in little you on of peak anything bit Express? third more a I Is -- both here read into little there I'm Maybe bit terms you was flow shifting more the we get can at the Ground volumes, can ability to give quarter. color

Ken, great question.

it are So running pleased Cyber will perspective, peak Monday. our week, from we from say, mentioned, be and absolute are And I after It are, capture a an very surcharge a perspective, up year-over-year. strong of we ahead December was will volumes amount forecast. from a I right, pleased. as dollar December up, picked

month. about to half is the half. That performance we do going back the in for that is of do want line because believe top think outlook be very a necessarily the I back that year So said, not do talk to the we strong to through December our December carry being going

So as we're back outlook, thinking at looking about top half some improvement. line the we're

I see the at the in in that, will going improvement domestic to volumes, that think of you're ground. We come think back particular, in improve that form half.

will look international, a actually slight half trough QX what perspective. think softening FedEx total like that was Asia. a We from do in half, with the that back anticipate we'll an then in And lot first volume revenue the some from is for the see actually, Freight we

be December. be but with not is So this yet back is come that going is capture thinking The execution we're in a to pleased of to going the we're signal very to The great. half. more great,

with come Citigroup. will Ari from question Rosa Next

on bit Congratulations you transition? here. strategic a how of could to be things playing I'm Just about smooth hear the talk done see if just you ensure move need Raj, little talk of separation to to curious the a are that out? kind the what kind about you

that customer on And you separate attrition out operations the then, out just of businesses. see X separation and as aren't their your kind as businesses to guys the kind also, you risk of X maybe customers what it risk are a the of the ensuring thoughts or by confused separating

Ari. you, Thank Yes.

the decided we are FedEx I separate think value we because potential shareholder to -- of to both for and Freight. increase FedEx

from we -- here in are as with we make place we'll office day head, to sure put get that as the have separation management far As to X. the Russ Claude

you talked that the next issue folks, year, add you are deal about, To Brie have and of going a make the to XXX but sales, pay made, we that sales that sure in to with VP appointed about. we LTO the we talked directly points more as

We improve are our continue to also to customer going experience.

company the those association, commercial, you separation. technological, association FedEx that whether also a operational in for FedEx. And we arrangements to whether it's the place important with very as that or note it's it's lot through we It's the Freight whether will benefits have proceed from

handle be to this I So we'll transition well. think able quite

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

give a rollout, the areas, Canada or with particularly what you Just any do curious more well? aspect could And more experience And all? been what Network here. progression X.X of that's given color gone think planned it has around the other little the from has you the if challenging

Yes. No, Jordan. very much, thank you

make yes, deliberate X.X. we think, Network roll continue on and I policy. We've may approach significant to out service a progress prioritizing to taken

rest the optimized the have including in will early XXX integration Canada. We the far, in last And Montreal. of being Canada XXX stations market and major complete with so XXXX, we

roll we well. take we lessons keep one. time quite next feature As out then roll And something, that's a and this applying working into how out to every of the we we learn

reduction rolled have to out continuing We X.X. cost where P&D XX% see fully we are

XXX integrated. at end have we So of stations approximately the expect to FY 'XX,

So Jordan. that question, hopefully, answers your

question Imbro Your next Stephens will Inc. come with from Daniel

allocation sheet. and the balance Raj, maybe or on one John capital

did do the And investments that Or debt envision at each we target should you Or capital allocation intensity changing So business? hard first, change? guess, of divvied all? I leverage how both how envision you Will weren't maybe about making? this to you've previously worked how certain how being you for businesses. enable up? do think then, John, guess, reduce I spin capital

changes Thanks, true, Daniel. going to optimizing allocation. after That's capital before be stockholders. anticipating No, and Yes. separation. continuing business, significant existing adjusted to not Sure. focused is free be cash both to on We're the returned flow ensuring our any in we're

have place. continue programs We to the in

share with the -- total We're for the the of going for full $XXX billion a year. million already we've accomplished for to repurchases remaining remainder $X billion $X of of the year, in QX

going all So remain to that's in place.

allocation all something Now that's be coming post-separation be the you on keeping going kind the to updated in forward of to months, the terms we're look of over going of capital and in reviewing environment, that. progress to

next will Cowen. question from Seidl with Jason come TD The

wanted Congrats a to out about. to see there. commercial nice focus on the spoke you the bit It's creation value on some spin. little always agreements I

away. I'm X with also, be mentioned will bundle we companies? You long assuming should they'll just were the look the at anything And side help honored. about peak these what And are that between go are and drayage. existing I'm bundle offered the How the agreements going that for? how forward? contracts ones assuming on

great a That's question.

today. back like just base we take step need think Freight a FedEx I the clarify to and just of customer looks So what

X would one off powerhouse created and on a and and and the that them, first our strategy customer, partnerships today brand relationships with obviously, not these of them to That to customers. take solutioning has that that it commercial has really incredible foremost, deep networks be put the just FedEx then FedEx our build So the incredible with strength is is the Freight without lot together, is momentum. of together, put FedEx

That actual volume about the customers FedEx being that majority majority small at We today. of at contract on a bundled, when the while business ago is separately. market, competing Freight I the of FedEx are recognizing independent guess, a majority X or if an we negotiated really we said, the fragmented made Freight base look today, X in of you are Freight years pivot, revenue the the had negotiate to

honored. So be will those contracts

of every are you contracts majority Freight FedEx the vast, renegotiated As know, year. vast

honored XX at be sales confident will important today process. very we through they about dedicated go Freight. we And that's are why focus incremental course, this we of reps as sales large accounts So team. in have dedicated It's the are note, that to from to

them. So this will to additive be

will benefit As not process, we FedEx that true. and is we the anticipate Freight miss small nuanced the of There that strategy, because we I go that at because where the that's customer really program bundle, discount have through at common diluted earned slightly is the that, will a look FedEx. revenue of leveraged is that be and

that incremental on works or earned the more your as more you get side. benefit they actually FedEx parcel Freight the way is discount Actually, program ship LTL,

comfortable small we're in from it. potential improvement, strategy, we execute our But So customer benefit too. very can and commercial is some there

to providing I Federal has benefited the of from a services comments, as mentioned recognize to think previously, from important I that, add through operating Express. Raj to would kind and standpoint, companies his Freight that what separate intracompany it's in

already the will be we enhanced go exist separation. So as a with lot that just of forward agreements

have going this. reinvent So wheel we're to the on not to

from next Cunningham with come question will Research. Melius The Conor

the Maybe first the EPS, change to just going back in the question, on guidance.

in quarter. talk the are you improving. don't in I could and the the of change the a if little like businesses just associated entirety So between business? Freight bit guidance pressured with was actually the X dynamic seems clearly changes the Freight just It trends in Express Is the know the overall. the about underlying core

Conor. Thank Sure. you,

a So implemented 'XX for that pricing actions FY are we've number look, there's supporting assumptions of earnings The growth sure. considerations. our

to resulting the remain expectations economy revenue constrained that weakness Raj U.S. the that largely However, from industrial the continued talked in due about. environment demand

for though -- about talked the which some bit to thereby expect with to expected U.S. We line. putting even flow-through peak, a growth and do lower contributing, are lower a services, deferred our from remain we but So muted U.S. but while, premium op bottom continued services, there's margin. pressure premium services margin and income on are little

and in of in driven year-over-year, decline slightly excuse modest industrial year-over-year. low revenue The and -- end flattish just So really, the a industrial production revenue. midpoint assumes range pricing, of global top the end assumes revenues and our incrementally improvement slight growth by assumes range slight revenue the -- production incremental softer me,

are remain to we into things we're of the to and DRIVE, confident going during So be controlling We some those can. those will considerations But going focused incrementally savings ramp the on our continue second outlook. in half. that those are

just And other Yes. thing, me one add let Conor.

months to I I to been think were at see last me XX overarching the ISM for that mean, level, surprising an declining really 'XX. it's

have lot that what think difficult produced also that can this environment, it in such a about and to And very shows will happen we can FEC around. market say it's turns. says do fact we and in I the So what that -- when turn when the especially results

to the for the first saw production we continues similar that we the the to from half. the from was while the or And what and manufacturing revenue coming LTL. FEC XX% half stated But are second as industrial of be assuming earlier, is in BXB, comes XX%

calculations. you So hopefully, will help that with the

Ossenbeck Your next question JPMorgan. with Brian will come from

So come just to you wanted price Brie, competition. the to general back on and for I trends

pretty it's mentioned out competitive You still there.

the but of don't it sound business necessarily, faster. trade-down is side growing like You a the deferred does see

bit offer comment. So little I just if a see can more want you to

How moving direction is XQ And the of that the put into the surcharge are the demand sticking? the but those half place want? the revenue of network ones you've to optimize that that from like about into and progress management sounds would would other in back year? how what sticking, get help you It that sort

Brian, great question.

going it's a I is to pressured. rational. remain the back point, market do economy; there two, mix I X competitive. think that the From customers the the feel we your is in is things: That do pricing have change. a function down. to do we emphasize and about one, half, So some a trading to that strategy, yields certainly want they as are of

customers add simply of the our In need customers a able to because acquire to portfolio. also, to trading you as volume new to We're be go are and we customers less. all downturn, new

And in so the portfolio. customers deferred in growth there is new

strategy downturn, base the pricing a I a especially rate that pressure the the perspective, From The is time well. in team, think is across in and weights then really portfolio, portfolio. but really know Freight economy, we're weight. all seeing despite on the every we're We executing pressured the are

a lot perspective. a do can from weight not team there's so the that And

What those amount really disciplined in especially of surcharges, a they be surcharges that do drive cost. can disproportionate the getting is

So than From on peak that is do. seeing a great large we're is ports better a example. part we're peak. what large of lot we a package in December packages of nobody They're executing And actually, seeing moves from a flow-through perspective, perspective.

here but into the disciplined the rural States have that and the the being in large we're capabilities on for a a United you is And heard, package we then putting not As customers. from lot get best value of a we matters it. our perspective, surcharge, markets, in that are rural to from only increasing capture dimensional capture proposition

last have or don't The to their X% volume, different provider. X% of they want a to use

of hope surcharges. those base They getting on really economy. that is pressured disciplined contributing, helps. being the really the we're rate so because but are And I

with will question next Oglenski from come Barclays. Brandon The

reflecting yesterday, margins have think, many it times. maybe losing in but Brie has largest it's lot what on guess, of looks you spin. happy on a about shareholders especially can know I the DRIVE? up. you're revenue differently context the be customer, did way driving But on spoke actually under Congratulations expand your I You too. business even mentioned Raj, like how today which, And do definitely I of you your will you doing here, your versus quality, the what come

what So you portfolio in looking can else forward? the potentially change

trying Brandon. firstly. me DRIVE digest I'm that question, Okay. let But with to start just

think evolved this company. we in how work be clearly I DRIVE to is

and approach overarching very to execution. And to rigorous and to We data-driven approach and decision-making, overall -- leads it are market-leading disciplined leads a better have that much execution. an we ultimately governance established it's much, very timely

for in to a execute as FedEx It's going good is stead as So this we foundation go forward. to stand.

thing The our data-first and offerings. transformation adopted mindset technological that in underlying is profound. solving service creating problems innovation differentiation a quite have is second digital we in we also The while created

billion of those as the chain place. vision making directly And our the things changed chain supply have why, would roughly smarter And $X the for smarter are our it that's of powering we've -- $X.X be own X making by put in savings, execution. to supply that's our also everyone, result of I new starts we technologies billion DRIVE think that

through those is that's we I our implement confidence all comes in guided DRIVE performance gives are or And us look the that as asked. expand that question what what execution. that's of hope all operations our So expand Tricolor on what and or and whether Network be at you about. going as to expand we we answers Europe, next, and X.X DRIVE, whether your improve

question come Bruce Stifel. will with Chan next The from

a Maybe privatization. to And I question. get to we echo of spin, the that rational. mandate, making more Is for more competitor? mean profit that somewhat a of your brief Bonafide material competitive thus, maybe introducing service USPS what see. Brian's There's on thoughts a the would suggestion the some environment. been can a here great follow-up that and Maybe on Or postal is new the sentiments

would any be color and there So thoughts great.

something us is very on that. it early comment to like for Well,

principles keep is industry, state subsidized will by U.S. the important the we are closely, delivery that that package that important monitoring our here to for it's it's business -- the the taxpayer. that of think I obviously. one developments But very is not We there

think very I a set. that's what will here. And get be adopted will consideration hopefully, important that

ISI. Evercore from will question John come next The with Chappell

of Brie, I a narrative group right sentiment about that was be hoping some seems tariffs. to the now. dominating It's around to the ask

structure much Trump than at were the You're administration. in first different a cost you

more opposed from customers relates a any be you secular And network term would your it you I as how be demand as that manage a were of long-term short your guess, have about in heard may tariffs, pull-forward? just to secondly, a to So surge to if like shift? there

great a it's Yes, question.

pull December a there little might perspective, So a of bit forward. from a be

As about, network Parcel movement in talked some the in Freight we network the the and ports. we are seeing from both

much be obviously, little to of just be because So might it as the bit. tell well consumer is that middle in hard It's as right How much So we're demand? peak. will now is clearer a there in January. inventory much of how

the we to with right From DRIVE. perspective, able a pleased doing point, airline with are Raj's quickly I things respond is how differently To reaction now. am team really

I'm shared, as as as far Raj very being we're has able adapt, confident, many So to times, everywhere.

everywhere. relationships have We customer

So we're to as them. customers to with there pivot pivot, prepare

administration, very to. So not are to so at what to to might But with respond going our hard we future it's ready try happen we're agility. predict this point under

And global is that, on And bottom a that me we network And in we can -- the every a capacity global high-value move. you have John, much can connects imagine, manufacturing of that just referendum much, as from information of our let say we supply we can especially than are and up. scale single a see chains we the the move day, this place GDP already and economy. significant because quicker advantage fact XX%

you part that an is thing the than our has that's imagine -- includes different very And other end-to-end would clearance. before. say value And that are it customs proposition, much case agile, so is -- can that, of delivery. as we what International, one been I is

have other any we they're takes to that the from package country commodities insights move data, in. the country to So what and the about one the expertise, it all

our So as competitive becomes smarter. a chain make us this differentiation we advantage for supply and customer

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

but John, you that said the bigger a than times a tailwind, more couple post lot parts. moving Cyber Week there's is of headwind office the

couple can on it the think costs, It I that any you're corporate the there's we And of around there sort things. math, if seems a much, months? And spend, unallocated just way if about, should to as expectations? a maybe LTL? want just understand of then is what little just so communicate to clarify XX apply LTL we of And you any, Why trying QX to long. to is then our do

thanks, So Scott.

So look we forward for transaction to expect. posted let the way. And me XX-month of consistent what really start our do From with timing reasonable and the standpoint, this XX the is along timing period a you a magnitude is months. to on keeping with milestones

keeping we posted So to you forward look there.

Service, are taken been our as about to total the domestic mentioned out of hours I XX% also remarks, regard in out. makes With hours. as costs. we track Roughly cost hours with take to my the taken our U.S. out, We're of planned after and We Postal going other contract flight the Service on all Postal the XX% daytime up expiration. talked related U.S. daytime about have flight that

to that see it contract, wind be So start impacted a it impact from of into down to start tailwind in Postal my 'XX. as as full because will mentioned QX be will QX, I months X we'll remarks, a the Service in and and FY will

So some There's taking that gives perspective. pleased be that's done. in that background the just with out. to work been you more and We're cost doing

that some good color hopefully, gave on you Service. Postal the So

from come question Wadewitz next will with Tom The UBS.

see. Let's

that the more in that You hear thanks and more compete in in the on it's and and the some future? the was that future? discipline. time. focus Raj, would helpful talked wrong of it? you margin you the to bunch get basis spin, of those volume-focused LTL, the And improvement pricing with LTL I X,XXX but Or anticipate driven change a the by thoughts. think points the that things, all a you maybe a the of about of at of you detail for in on anticipate focus to complex, lot SMB, way it's is period On would over on Freight would I'm be volume-focused look hiring for harder potentially your wondering, somewhat salespeople,

Tom, it's Brie.

great that got strides. I discipline So really the across first, quality made revenue in team. we're pleased From we've the the main, a think, we've perspective, with

look as to see we do play this an offense. forward, we opportunity As

a invest to going salespeople. mix. we've got an new industrial We commercially know from are opportunity in We different

is right run Freight some And now technology weight, base mentioned We to from our earlier, opportunity in capacity. is fill network XXX right when know the comfortably while the look of can we at as the we very down competitively, XXX. up weight think I to because there now our FedEx a using macro,

XPL opportunity look some at the to a be strategic, little more So we've got bit also market. to

to yes, we come. So the some more there's going offense, we're answer and great things play is think to

David The Bernstein. next question will come Vernon from with

Network consolidated a sense I might like the So what to or Raj, think, XXX X.X, coming be give you have X.X end XXXX. mentioned of it back that us of by volume something to Network was kind -- would Can integration like you of I touched you the stations date? for with think percentage fiscal

trying of the difficult-to-tackle to you of the 'XX line? heart to operations on meet the this to major the get of coming integration as sort starts is timing the rubber speak, physical fiscal a when more about start the a then in of 'XX, to better the really courier the Just think in And play, network. domestic so sense may road, for when time fiscal be metros

FY The is XXX stations 'XX number David. integrated. you, Thank Yes.

is going FY 'XX. I the big think in lift to be

X FY but we Network big 'XX big X.X. and 'XX the So are for us for the lift will have be FY FY 'XX years,

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

Thank outstanding our you, like for operator. In delivering thank closing, team members peak season. to this I'd

more days and to to finish. I forward X strong have We look really a go, very

Let season. this Thank happy a so call you you very holiday wish on listening all of me much.

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

disconnect. now may You