Q4 2023 FedEx Corp Earnings Call

June 20, 2023

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Please note. This event is being recorded I would now like to turn the conference over to Mickey Foster Vice President of Investor Relations. Please go ahead Sir.

Good afternoon, and welcome to Fedex Corporation's fourth quarter earnings Conference call.

The fourth quarter earnings release, and Stat book are on our website at <unk> Dot com.

This call and the accompanying slides are being streamed from our website.

Where the replay and slides will be available for about one year.

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

During our question and answer session callers will be limited to one question in order to allow us to accommodate all those who would like to participate.

I want to remind all listeners that Fedex Corporation desires to take advantage of the safe Harbor provisions of the private Securities Litigation Reform Act.

Certain statements in this conference call such as projections regarding future performance may be considered forward looking statements within the meaning of the act.

Such forward looking statements are subject to risks uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward looking statements for.

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

Please refer to the Investor relations portion of our website at Fedex Dot com for a reconciliation of the non-GAAP financial measures.

Discussed on this call to the most directly comparable GAAP measures.

Joining us on the call today are Raj Subramaniam, President and CEO.

Mike <unk> executive Vice President and CFO.

And Bruce <unk> Executive Vice President Chief customer Officer.

And now over to Raj.

Good afternoon, everyone.

Before I start my remarks, I first want to acknowledge the upcoming retirement of Mike and his terrific contributions and accomplishments at Fedex over the last 18 years.

Mike was named CFO in March of 2020, and I'm grateful for his leadership over the three years. Since then as we navigated a global pandemic and significant change.

Due to his tireless work Fedex is on solid footing as we execute the next phase of our strategy.

<unk>, Mike has been a good friend and a colleague of mine and I wish him all the very best.

Our Superman President and CEO .

Now, let me turn to my remarks for the quarter.

Thanks to the hard work of the Fedex team. We have demonstrated continued progress on our journey to transform into the world's most flexible.

<unk> and intelligent network.

In the fourth quarter, we introduced and began preparing for one Fedex.

At the same time, we continued to bend the cost curve through our drive initiatives.

This supported our fiscal year 2023 earnings which came in above the midpoint of our March outlook. Despite continued soft demand and an unplanned yearend tax expense, which negatively impacted our earnings by <unk> 18 for the quarter.

Our operating performance remains solid.

We are entering fiscal 2024 with a continued focus on areas within our control and a commitment to execute swiftly on our priorities. This focus will support sustained profit improvement in FY 'twenty four through an environment that we expect to remain marked by demand.

Challenges, particularly in the first half.

Turning to slide six I will start with a snapshot of the quarter.

Total revenue in the fourth quarter was down 10% year over year as volumes declined with demand remaining soft across the market.

With this said the rate of volume decline in ground and express improved sequentially.

As expected yield trends have been pressured in international markets, where the supply demand balances have changed.

We continued to maintain our focus on revenue quality and are committed to our disciplined pricing approach focused on the long term.

While we expect these pressures to persist we do expect moderation throughout the fiscal year.

But our execution on a number of cost actions, we delivered adjusted operating profit of $1 8 billion.

Our fourth quarter performance enabled us to close out the year with an adjusted operating margin of 6% and adjusted earnings per share of $14 96.

While our revenue declines were in line with the industry I am pleased to note that our flow through performance continues to improve and we believe is the best in the industry in the first quarter of the calendar year.

We continued to maintain our focus on revenue quality and are committed to our disciplined pricing approach focused on the long term.

Beyond the headline numbers our results this quarter embed continued progress on our transformation.

While we expect these pressures to persist we do expect moderation throughout the fiscal year.

I am pleased to see our cost out efforts take hold but I'm also equally excited about the operational improvements we are driving as we build the smartest logistics network in the world.

But our execution on a number of cost actions, we delivered adjusted operating profit of $1 8 billion.

Our fourth quarter performance enabled us to close out the year with an adjusted operating margin of 6% and adjusted earnings per share of $14 96.

For example, our market leading picture proof of delivery is now available to 90% of global residential deliveries, having launched in Europe earlier this month.

Picture proof of delivery gives our customers visibility to their delivered shipment at the click of a button.

And it has led to a 14% reduction in distributed delivery cases and contributed to a 17% reduction in call volume in the United States.

Beyond the headline numbers our results this quarter embed continued progress on our transformation.

Our for our estimated delivery time window.

I am pleased to see our cost out efforts take hold but I'm also equally excited about the operational improvements we are driving as we build the smartest logistics network in the world.

Which we have rolled out to 47 countries is also improving the customer experience.

And at ground.

Our dock modernization efforts are enhancing productivity, helping us run our docs smarter with new technology and key data insights.

For example, our market leading picture proof of delivery is now available to 90% of global residential deliveries, having launched in Europe earlier this month.

This includes a new network operating plan that uses machine learning to develop more detailed and accurate volume forecast.

Picture proof of delivery gives our customers visibility to their delivered shipments at the click of a button.

Ground remained a standout in this quarter as the team delivered operating income of over $1 billion.

And it has led to a 14% reduction in distributed delivery cases and contributed to a 17% reduction in call volume in the United States.

For the first time in company history.

The ground team expanded margins despite lower volumes in the second half.

Our for our estimated delivery time window.

This is a clear indication or drive transformation is working and gives us confidence as we push forward.

Which we have rolled out to 47 countries is also improving the customer experience.

And amid continued volume pressure cost per package this quarter increased only one 9%.

And at ground.

Our dock modernization efforts are enhancing productivity, helping us run our dock smarter with new technology and key data insights.

This was supported by a total reduction in operating expenses of $350 million as the company continued to manage staffing levels effectively benefited from solid closures and consolidations and reduced Sunday operations.

This includes a new network operating plan that uses machine learning to develop more detailed and accurate volume forecast.

Ground remained a standout in this quarter as the team delivered operating income of over $1 billion.

These actions helped bring grounds fourth quarter operating margin to 12, 1%.

For the first time in company history.

At Express we have made significant progress aligning costs with underlying demand.

The ground team expanded margins despite lower volumes in the second half.

Our initiatives continue to ramp.

This is a clear indication or drive transformation is working and gives us confidence as we push forward.

And we expect accelerating benefits in the upcoming fiscal year.

Demand dynamics combined with yield pressure drove a 13% decline in revenue at express.

And amid continued volume pressure cost per package this quarter increased only one 9%.

This performance was generally in line with our expectations coming into the quarter.

In the face of these headwinds the express team was able to accelerate cost and productivity efforts driven by a combination of structural and volume related initiatives.

The express team reduced total flight hours by 12% year over year and permanently retired 18 aircrafts, including 12 MD Elevens this quarter.

These actions helped bring grounds fourth quarter operating margin to 12, 1%.

At Express we have made significant progress aligning costs with underlying demand.

The team is also planning to take another 29 aircrafts scheduled flying in fiscal 2024.

Our initiatives continue to ramp.

And we expect accelerating benefits in the upcoming fiscal year.

In addition, we made excellent progress implementing structural cost savings initiatives beyond flights, including certain domestic efficiency initiatives.

Demand dynamics combined with yield pressure drove a 13% decline in revenue at express.

This performance was generally in line with our expectations coming into the quarter.

This includes the shift to a single daily dispatch of corridors.

In the face of these headwinds the express team was able to accelerate cost and productivity efforts driven by a combination of structural and volume related initiatives.

<unk> achieved its target of $50 million in fourth quarter savings as well as accelerated hub productivity measures.

In Europe, we continue to improve operational execution across the region.

The express team produced total flight hours by 12% year over year and permanently retired 18 aircrafts, including 12 MD Elevens this quarter.

Notably we announced the official opening of two of our hubs this quarter.

In April we reopened our international road hub and Darwin, Netherlands, and this month, we opened our new state of the Art Road.

The team is also planning to take another 29 aircrafts out of schedule flying in fiscal 2024.

Road hub in Novara, Italy.

In addition, we made excellent progress implementing structural cost savings initiatives beyond flights, including certain domestic efficiency initiatives.

These two facilities.

Handset capabilities enable more efficient routing and improved our service on the continent.

This includes the shift to a single daily dispatch of corridors, which achieved its target of $15 million in fourth quarter savings as well as accelerated hub productivity measures.

In aggregate total operating expenses at express were down $1 1 billion in the quarter.

The magnitude of the operating margin decline has continued to narrow sequentially as our initiatives take hold.

In Europe , we continue to improve operational execution across the region.

At freight the team is focused on maintaining pricing discipline, while flexing costs to protect profitability.

Notably we announced the official opening of two of our hubs this quarter.

In April we reopen or international road hub, and Darwin, Netherlands, and this month, we opened our new state of the Art Road.

The freight team was able to reduce operating expenses by over $330 million in the fourth quarter.

The road hub in Navarra, Italy.

This will be further supported by our announced plan to close and consolidate 29 locations, which will be completed by August.

These two facilities have enhanced <unk> capabilities enable more efficient routing and improved our service on the continent.

Consolidation will improve service levels, while lowering our cost to serve.

In aggregate total operating expenses at express were down $1 1 billion in the quarter.

Further we have conducted another round of furloughs to match staffing with volume levels and are limiting hiring of salaried employees.

The magnitude of the operating margin decline has continued to narrow sequentially as our initiatives take hold.

Turning to slide seven.

We continue to make significant progress in taking costs out of our network delivery.

At freight the team is focused on maintaining pricing discipline, while flexing costs to protect profitability.

Delivering a $2 billion year over year reduction in operating costs in the fourth quarter of FY2023.

The freight team was able to reduce operating expenses by over $330 million in the fourth quarter.

This included more effectively matching flying with demand.

Marking the first quarter of this year, where our flight hours declined more than the underlying volumes.

This will be further supported by our announced plan to close and consolidate 29 locations, which will be completed by August .

Additionally, we continued to aggressively manage head count, including attrition to align our teams with our network changes underway.

Consolidation will improve service levels, while lowering our cost to serve.

We exceeded our target with U S head count down by about 29000 in FY2023.

Further we have conducted another round of furloughs to match staffing with volume levels and are limiting hiring of salaried employees.

Also included in these cost reductions are ramping benefits from the numerous initiatives we have identified across the 14 drive domains.

To slide seven.

We continue to make significant progress in taking costs out of our network delivery.

Given our progress we are confident that we can deliver on our previous goal.

Delivering a $2 billion year over year reduction in operating costs in the fourth quarter of FY2023.

About $1 8 billion in cost reduction benefits from drive this fiscal year and $4 billion of permanent cost reductions in fiscal year 2025.

This included more effectively matching flying with demand.

Marking the first quarter of this year, where our flight hours declined more than the underlying volumes.

Additionally, we continued to aggressively manage head count, including attrition to align our teams with our network changes underway.

As we introduced in April between now and June of 2024, we will be consolidating our operating companies into one unified organization.

We exceeded our target with U S head count down by about 29000 in FY2023.

One Fedex is the next step of this journey to realize our full value potential.

Also included in these cost reductions are ramping benefits from the numerous initiatives we have identified across the 14 drive domains.

It aligns our organization to one corporate structure that will facilitate the execution of our drive transformation and will further enable the work that's underway in network $2 <unk>.

Given our progress we are confident that we can deliver on our previous goal.

Our work towards this goal is already taking shape.

We're about $1 8 billion in cost reduction benefits from drive this fiscal year and $4 billion of permanent cost reductions in fiscal year 2025.

We have taken a significant step forward in the implementation of network Todaro with today's announcement of the transformation of our Canadian operations.

In April of 2024, we will begin to transition all Fedex ground operations and personnel in Canada to Fedex Express, creating a truly integrated and unified Canadian network.

As we introduced in April between now and June of 2024, we will be consolidating our operating companies into one unified organization.

One Fedex is the next step of this journey to realize our full value potential.

This unification is enabled by the nature of the Canadian market, where the population is heavily concentrated in a few key geographies currently serviced by both up goes.

It aligns our organization to one corporate structure that will facilitate the execution of our drive transformation and will further enable the work that's underway in network $2 <unk>.

Consolidation will create significant efficiencies throughout the business from first to last mile and across our support teams.

Our work towards this goal is already taking shape.

We expect this change in Canada to generate an annualized benefit of over $100 million upon.

We have taken a significant step forward in the implementation of network toward auto with today's announcement of the transformation of our Canadian operations.

<unk> and FY 'twenty five.

We've announced transitions in 20 markets and Canada marks the first large scale implementation of network <unk>, which bills of the learnings from our completed transitions in other geographies.

April of 2024, we will begin to transition all Fedex ground operations and personnel in Canada to Fedex Express, creating a truly integrated and unified Canadian network.

To be clear, we're not taking a one size fits all approach to our network to <unk> strategy.

This unification is enabled by the nature of the Canadian market, where the population is heavily concentrated in a few key geographies currently serviced by both op goes.

Success depends on our mix of models, including employees and contracting with service providers as all are important pieces of how Fedex moves packages.

Consolidation will create significant efficiencies throughout the business from first to last mile and across our support teams.

Looking ahead to FY 'twenty four we're entering the year with a clear focus on what is within our control.

We expect this change in Canada to generate an annualized benefit of over $100 million.

And an underlying environment that remains dynamic across geographies.

Upon completion in FY 'twenty five.

We've announced transitions in 20 markets and Canada marks our first large scale implementation of network <unk>, which builds of the learnings from our completed transitions in other geographies.

This backdrop is likely to pressure revenue growth, particularly in the near term.

As a result, we're taking a prudent approach to our full year outlook that builds upon our solid finish to FY2023.

To be clear, we're not taking a one size fits all approach to our network to <unk> strategy.

We've also made progress on reducing capital intensity by continuing to focus on the highest return operation opportunities in an efficient manner.

Success depends on our mix of models, including employees and contracting with service providers as all are important pieces of how Fedex moves packages.

After FY 'twenty five we have no additional firm commitments on jet aircraft Capex.

Looking ahead to FY 'twenty four we're entering the year with a clear focus on what is within our control.

As such we expect our aircraft related Capex to decrease after FY 'twenty, four and be approximately $1 billion in FY 2006.

And an underlying environment that remains dynamic across geographies.

This backdrop is likely to pressure revenue growth, particularly in the near term.

This capital allocation strategy represents our approach to a more efficient and nimble network.

As a result, we're taking a prudent approach to our full year outlook that builds upon our solid finish to FY2023.

We will continue to look for additional opportunities as we proceed with our aircraft modernization strategy.

We've also made progress on reducing capital intensity by continuing to focus on the highest return operation opportunities in an efficient manner.

We will bring this discipline along with our improved flexibility and agility to ensure that we are successful given the uncertain external environment.

Offer FY 'twenty five we have no additional firm commitments on jet aircraft Capex.

In closing I am confident that the progress we are making on our transformation will translate into improved margins returns and cash flow throughout the year.

As such we expect our aircraft related Capex to decrease after FY 'twenty, four and be approximately $1 billion in FY 2006.

At the same time, our commitment to driving operational improvement will further enhance the customer experience.

This capital allocation strategy represents our approach to a more efficient and nimble network.

Now, let me turn it over to our Chief customer Officer breaker, Arie, who will discuss market trends and our commercial strategy in more detail.

We will continue to look for additional opportunities as we proceed with our aircraft modernization strategy.

Thank you Raj and good afternoon, everyone.

As expected the fourth quarter operating environment remained pressured with year over year volume declines in sequential moderation in yields across all transportation segments.

We will bring this discipline along with our improved flexibility and agility to ensure that we are successful given the uncertain external environment.

We remain focused on revenue quality and creating meaningful differentiation, while managing through these dynamics.

In closing I am confident that the progress we're making on our transformation will translate into improved margins returns and cash flow throughout the year.

Let's take each segment in turn now.

Fedex ground fourth quarter revenue was down 2% year over year, driven by a 6% decline in volume, partially offset by a 5% increase in yield due to surcharges and product mix. We once again delivered strong service levels and best in class market transits.

At the same time, our commitment to driving operational improvement will further enhance the customer experience.

Now, let me turn it over to our Chief customer Officer breaker, Arie, who will discuss market trends and our commercial strategy in more detail.

Revenue at Fedex Express was down 13% year over year parcel volume declines were most pronounced in the United States.

And in addition, U S freight pounds were down over 25% due to a change in strategy from a very large customer.

Thank you Raj and good afternoon, everyone as.

As expected the fourth quarter operating environment remained pressured with year over year volume declines in sequential moderation in yields across all transportation segments. We remained focused on revenue quality and creating meaningful differentiation, while managing through these dynamics.

International export volumes were about 4% lower year over year.

At Fedex freight revenue was down 18% driven by an 18% decline in volumes with revenue per shipment flat.

This decline was driven primarily by the slowdown in the market and high inventory levels.

Let's take each segment in turn now.

Although the pricing environment is moderating our pricing discipline remains strong.

Let's move now to slide 11.

As expected yield was pressured as year over year fuel surcharge comparisons normalized.

Customer demand rebalance between priority and economy services capacity availability.

Revenue at Fedex Express was down 13% year over year parcel volume declines were most pronounced in the United States.

This is most notable in the Asian markets.

In response, we remained focus on revenue quality, while managing our mix.

And in addition, U S freight pounds were down over 25% due to a change in strategy from a very large customer.

At ground and U S domestic express yield improved year over year, but at a moderating rate versus the previous three quarters and as I mentioned, a moment ago Freida freight yield was flat.

International export volumes were about 4% lower year over year.

At Fedex freight revenue was down 18% driven by an 18% decline in volumes with revenue per shipment flat.

Turning now to slide 12, our efforts to make the network at the most flexible efficient and intelligent network in the world are taking hold.

This decline was driven primarily by the slowdown in the market and high inventory levels.

We are delivering better service and outcomes for our customers, creating deep relationships and of course incremental revenue for Fedex.

Although the pricing environment is moderating our pricing discipline remained strong.

Let's move now to slide 11.

These efforts are supported by a fantastic portfolio of services.

As expected yield was pressured as year over year fuel surcharge comparisons normalized <unk>.

Raj spoke earlier about the benefits, we and our customers are seeing from the expanded rollout of picture proof of delivery and continued enhancements to the estimated time delivery window.

Customer demand rebalance between priority and economy services capacity availability.

This is most notable in the Asian markets.

Later this year, we plan to narrow our four hour delivery window in many locations and provide new enhanced mapping capabilities to help customers track their package movements.

In response, we remained focus on revenue quality, while managing our mix.

At ground and U S domestic express yield improved year over year, but at a moderating rate versus the previous three quarters and as I mentioned, a moment ago Freida freight yield was flat.

Returns is also an area, where we're underpenetrated and so we're focusing on growth.

Turns move through our network similarly to BW shipments and our highly efficient in our network.

Turning now to slide 12, our efforts to make the network at the most flexible efficient and intelligent network in the world are taking hold.

In the fourth quarter, we introduced our new returns program that X consolidated returns, which is available at Fedex office locations.

We are delivering better service and outcomes for our customers, creating deep relationships and of course incremental revenue for Fedex.

For merchants, it's a low cost e-commerce solution for lightweight apparel returns with end to end visibility and for shoppers. It's a convenient no label no box Dropbox experience using a QR code. We have received excellent feedback and look forward to continuing to scale. This solution very quickly.

These efforts are supported by a fantastic portfolio of services Raj.

Raj spoke earlier about the benefits, we and our customers are seeing from the expanded rollout of picture proof of delivery and continued enhancements to the estimated time delivery window.

Later this year, we plan to narrow our four hour delivery window in many locations and provide new enhanced mapping capabilities to help customers track their package movements.

Finally last month, we launched Fedex sustainability insights a cloud based tool that enables customers to view estimated carbon emissions for both individual tracking numbers and all their Fedex accounts.

Returns is also an area, where we're underpenetrated and so we're focusing on growth.

This platform marks the foundation of our new suite of tools for our customers.

Turns move through our network similarly to BW shipments and our highly efficient in our network.

It enables customers to transfer their carbon data to their own internal systems via an API.

In the fourth quarter, we introduced our new returns program that X consolidated returns, which is available at Fedex office locations.

The insights are also available online for our small customers.

Leveraging the vast shipment data that we have and using our AI and machine learning capabilities, we are able to provide information to our customers in a meaningful and actionable manner.

I am very excited about this portfolio expansion and firmly believe that our supply chain powered by Fedex is a competitive advantage for our customers.

I'm proud of the team for their unwavering commitment to service and for delivering these innovative solutions now I will turn it over to Mike to discuss the financials in more detail.

Thanks, Larry I'll start on slide 14.

Fedex team demonstrated strong operational execution to close out fiscal 2023.

This platform marks the foundation of our new suite of tools for our customers.

It enables customers to transfer their carbon data to their own internal systems via an API.

Looking at our transportation segment performance for the fourth quarter, starting with ground, which continues to deliver strong results.

The insights are also available online for our small customers.

Operating income increased 18% and operating margin expanded 210 basis points to 12, 1%, even with volumes down 6%.

Leveraging the vast shipment data that we have and using our AI and machine learning capabilities, we are able to provide information to our customers in a meaningful and actionable manner.

Margin expansion was supported by yield growth of 5% and strong cost controls driven by lower line haul expense.

I am very excited about this portfolio expansion and firmly believe that our supply chain powered by Fedex is a competitive advantage for our customers.

At Express, we're seeing sequential operating margin improvement as our team continues to move with urgency to drive structural and volume related cost improvements.

I'm proud of the team for their unwavering commitment to service and for delivering these innovative solutions now I will turn it over to Mike to discuss the financials in more detail.

Adjusted operating income declined 47% and adjusted margin contracted 320 basis points to 5% as package volumes were down 7% and yields declined 3% due to international package yield pressure.

Thanks, Barry I'll start on slide 14.

Fedex team demonstrated strong operational execution to close out fiscal 2023.

Looking at our transportation segment performance for the fourth quarter, starting with ground, which continues to deliver strong results.

At freight the team continues to navigate a softening volume environment.

Operating income decreased 26% and operating margin declined 210 basis points as shipments declined 18% and yield moderated.

Operating income increased 18% and operating margin expanded 210 basis points to 12, 1%, even with volumes down 6%.

Our fourth quarter results includes several noncash items.

Margin expansion was supported by yield growth of 5% and strong cost controls driven by lower line haul expense.

We recorded an impairment charge of $70 million related to the decision to permanently retire from service 18 aircraft and 34 related engines.

At Express, we're seeing sequential operating margin improvement as our team continues to move with urgency to drive structural and volume related cost improvements.

The results also include $47 million of goodwill and other asset impairment charges related to the shop Renter acquisition.

Adjusted operating income declined 47% and adjusted margin contracted 320 basis points to 5% as package volumes were down 7% and yields declined 3% due to international package yield pressure.

In addition, we incurred an unplanned tax expense of $46 million from a reevaluation of certain foreign tax assets.

To provide additional color on recent demand trends and what we're planning for in our outlook.

At freight the team continues to navigate a softening volume environment.

Slide 15 shows trailing monthly volume trends over the last six months for our major service categories.

Operating income decreased 26% and operating margin declined 210 basis points as shipments declined 18% and yield moderated.

Volume declines continued in the quarter.

While still negative ground and U S domestic express year over year package volume trends improved in EMEA on a sequential basis.

Our fourth quarter results include several noncash items.

We recorded an impairment charge of $70 million related to the decision to permanently retire from service 18 aircraft and 34 related engines.

As we look to the first quarter of FY 'twenty four we expect volume declines to continue to moderate at express and ground as we lap the onset of softer volumes.

The results also include $47 million of goodwill and other asset impairment charges related to the shop runner acquisition.

While freight will continue to experience pressure.

This brings me to our FY 'twenty four earnings outlook on slide 16.

In addition, we incurred an unplanned tax expense of $46 million from a reevaluation of certain foreign tax assets.

We remain acutely focused on maintaining our strong commercial position prioritizing revenue quality.

And driving profitability improvement through our efficiency initiatives supported by drive.

To provide additional color on recent demand trends and what we're planning for in our outlook Slide 15 shows trailing monthly volume trends over the last six months for our major service categories.

These efforts are more effectively aligning our cost base with demand, reducing our permanent costs and increasing the flexibility of our network.

Volume declines continued in the quarter.

We do expect external business conditions to remain challenging near term and there remains significant uncertainty with respect to the timing of demand recovery, particularly in the back half of our fiscal year.

While still negative ground and U S. Domestic express year over year package volume trends improved in may on a sequential basis.

As we look to the first quarter of FY 'twenty four we expect volume declines to continue to moderate at express and ground as we lap the onset of softer volumes, while freight will continue to experience pressure.

As a result, we are preparing for several potential outcomes as we think about the year ahead.

This led us to establish an adjusted earnings per share outlook range of $16 50 to $18 50 for fiscal 2024.

This brings me to our FY 'twenty four earnings outlook on slide 16.

We remain acutely focused on maintaining our strong commercial position.

In a demand environment that remains consistent with what we are currently experiencing we anticipate flattish revenue for the full year and full year adjusted earnings per share towards the low end of the range.

Prioritizing revenue quality and driving profitability improvement through our efficiency initiatives supported by drive.

These efforts are more effectively aligning our cost base with demand, reducing our permanent costs and increasing the flexibility of our network.

Should macroeconomic conditions support an improving demand environment in the back half of the year.

We expect to see modest volume improvement for the year.

In this scenario, we expect revenue to be up low single digit percentage for the full year.

This will also translate into greater operating leverage from our more efficient network on a higher revenue base.

Driving an outlook for full year adjusted earnings per share closer to the high end of our range.

As a result, we are preparing for several potential outcomes as we think about the year ahead.

The key external factors that will determine the FY 'twenty four outcome, our broader economic activity in North America, Europe and in Trans Pacific trade.

This led us to establish an adjusted earnings per share outlook range of $16 50 to $18 50 for fiscal 2024.

Inventory restocking and the development of e-commerce activity as we continue to differentiate our offering.

At express and ground, we expect to build on fourth quarter cost momentum and see adjusted margin improvement in FY 'twenty four.

Should macroeconomic conditions support an improving demand environment in the back half of the year we.

Freight margins will remain strong in FY, 'twenty, four but lower than FY 'twenty, three given significant volume reductions in yield pressure.

We expect to see modest volume improvement for the year.

In this scenario, we expect revenue to be up low single digit percentage for the full year.

Yeah.

Turning to other aspects of our outlook.

First we expect a $230 million net noncash pension headwind with a $330 million headwind below the line offset by a $100 million lower pension service costs.

This would also translate into greater operating leverage from our more efficient network on a higher revenue base.

Driving the outlook for full year adjusted earnings per share closer to the high end of our range.

The key external factors that will determine the FY 'twenty four outcome, our broader economic activity in North America, Europe , and the Transpacific trade.

Partially offsetting this below the line impact we expect higher interest income on our cash balances.

Our projection for the full year effective tax rate is approximately 25% prior to the mark to market retirement plan adjustments.

Inventory restocking and the development of e-commerce activity as we continue to differentiate our offering.

Sure.

We are projecting $500 million of business optimization costs in FY 'twenty for associated with our transformation.

At express and ground, we expect to build on fourth quarter cost momentum and see adjusted margin improvement in FY 'twenty four.

We still expect a total pre tax spend of $2 billion through FY 'twenty five.

Freight margins will remain strong in FY, 'twenty, four but lower than FY 'twenty, three given significant volume reductions in yield pressure.

And the timing and amount of these business optimization expenses may change as we revise and implement our plans.

Turning to other aspects of our outlook.

Moving to the next slide we want to share how we're thinking about the operating profit consideration embedded in our expectations for the full year.

First we expect a $230 million net noncash pension headwind with a $330 million headwind below the line offset by a $100 million lower pension service costs.

For illustrative purposes, I'll use adjusted EPS of $17 50.

Partially offsetting this below the line impact we expect higher interest income on our cash balances.

The midpoint of the outlook range.

This scenario is based on modest demand recovery, leading to limited coverage of base cost inflationary pressures.

Our projection for the full year effects of tax rate is approximately 25% prior to the mark to market retirement plan adjustments.

In addition, we expect approximately $800 million of international export yield pressure as peak surcharges significantly diminish and product mix continued shifting toward deferred offerings.

Yeah.

We are projecting $500 million of business optimization costs in FY 'twenty for associated with our transformation.

We still expect a total pre tax spend of $2 billion through FY 'twenty five.

We also include a $500 million increase in variable compensation to ensure our compensation package is competitive.

And the timing and amount of these business optimization expenses may change as we revise and implement our plans.

This is critical to retain key talent as we execute our drive transformation.

Moving to the next slide we want to share how we're thinking about the operating profit consideration embedded in our expectations for the full year.

Importantly, though these pressures are more than offset by the $1 $8 billion in cost savings from drive.

For illustrative purposes, I'll use adjusted EPS of $17 50.

Together these illustrative components lead to FY 'twenty for adjusted operating profit of approximately $6 2 billion at the midpoint of our outlook.

The midpoint of the outlook range.

This scenarios based on modest demand recovery, leading to limited coverage of base cost inflationary pressures.

Moving to slide 18.

We continue our unwavering focus on efficient and responsible capital allocation and our pursuit to drive shareholder returns.

In addition, we expect approximately $800 million of international export yield pressure as peak surcharges significantly diminish and product mix continue shifting towards deferred offerings.

For the year, we ended with $6 8 billion in cash in line with where we began the year despite the challenging business environment.

We also include a $500 million increase in variable compensation to ensure our compensation package is competitive.

We accomplish this through continued improvement in cash conversion cycles in networking capital along with reduced capital expenditures.

This is critical to retain key talent as we execute our drive transformation.

Capital expenditures were $6 2 billion, which represented six 8% of revenue versus seven 2% of revenue in fiscal 2022.

Importantly, though these pressures are more than offset by the $1 $8 billion in cost savings from drive.

FY2023 capex was slightly higher than our projection due largely to timing as easing supply chain constraints accelerated delivery of equipment and other projects.

Together these illustrative components lead to FY 'twenty for adjusted operating profit of approximately $6 2 billion at the midpoint of our outlook.

With a slight acceleration of certain spend into FY 'twenty. Three we are now projecting five 7 billion in Capex for FY, 'twenty, four which achieved our target of less than six 5% capex as a percentage of revenue a year earlier than we projected.

Moving to slide 18.

We continue our unwavering focus on efficient and responsible capital allocation and our pursuit to drive shareholder returns.

For the year, we ended with $6 8 billion in cash in line with where we began the year despite the challenging business environment.

Our fiscal 2023, adjusted free cash flow of $3 5 billion supported the repurchase of approximately one $5 billion in stock at an average share price of approximately $163 a share.

We accomplish this through continued improvement in cash conversion cycles in networking capital along with reduced capital expenditures.

Capital expenditures were $6 2 billion, which represented six 8% of revenue versus seven 2% of revenue in fiscal 2022.

And we paid $1 2 billion of dividends.

In addition, we funded $800 million in voluntary pension contributions.

FY2023 capex was slightly higher than our projections due largely to timing as easing supply chain constraints accelerated delivery of equipment and other projects.

Looking ahead, we will continue to invest in attractive return improvement initiatives.

We're committed to further reducing capital intensity.

Capacity investments at ground will decline in addition to the lower aircraft expenditures Express Raj mentioned.

And we expect to repurchase an additional $2 billion of stock in fiscal 2024.

As previously announced we are raising our dividend by 10%, which increases our adjusted payout ratio to over 30%.

Our fiscal 2023, adjusted free cash flow of $3 5 billion supported the repurchase of approximately one $5 billion in stock at an average share price of approximately $163 a share.

These significant stockholder returns reflect confidence in our continued execution of profitability and return improvement initiatives.

Lastly, we are planning for $800 million of voluntary pension contributions to our U S plans, which were 94, 5% funded at year end.

And we paid $1 2 billion of dividends.

In addition, we funded $800 million in voluntary pension contributions.

Looking ahead, we will continue to invest in attractive return improvement initiatives.

In closing, we are making progress on our transformation and remain focused on delivering shareholder value by driving improved profitability.

We're committed to further reducing capital intensity.

Lowering our capital intensity, while continuing to deliver strong return of excess cash to show shareholders.

Capacity investments at ground will decline in addition to the lower aircraft expenditures Express Raj mentioned.

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

And we expect to repurchase an additional $2 billion of stock in fiscal 2024.

Thank you we will now begin our question and answer session will be closed.

As previously announced we are raising our dividend by 10%, which increases our adjusted payout ratio to over 30%.

To ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys.

These significant stockholder returns reflect confidence in our continued execution of profitability and return improvement initiatives.

And to withdraw your question. Please press Star then two.

Please limit yourself to one question and at this time, we'll pause momentarily to assemble our roster.

Lastly, we are planning for $800 million of voluntary pension contributions to our U S plans, which were 94, 5% funded at year end.

In closing, we are making progress on our transformation and remain focused on delivering shareholder value by driving improved profitability.

And the first question will come from Allison <unk> with Wells Fargo. Please go ahead.

Hi, good evening.

Lowering our capital intensity, while continuing to deliver strong return of excess cash to show shareholders.

I just wanted to go back to the optimization in Canada.

<unk> talked a little bit about the uniqueness of the region could you maybe talk to how does that impact the deployment of the optimization and then more importantly relative to say that you asked how the scale difference in Canada versus the U S and how that's playing out my go forward. Thank you.

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

Thank you we will now begin question and answer session will be close.

To ask a question you May Press Star then one on your Touchtone phone.

Yes, Allison. Thank you for your question of course, Canada is a unique market and we're taking a different approach there than the market by market approach, we're taking in the U S. The Canadian population is heavily concentrated in a few key geographies and the volume is split roughly 50 50 between extra some ground.

If youre using a speakerphone please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then two.

Please limit yourself to one question and at this time, we'll pause momentarily to assemble our roster.

So we made the decision to consolidate everything under express and is the right time to take these steps because we will begin in April 2024, and completed by September of 2024, and it's very important that you understand that this is so unique to Canada, because we are going to take a market by market approach in the United States and we have a hybrid in the.

And the first question will come from Allison, Paul linear acoustic with Wells Fargo. Please go ahead.

Hi, good evening.

I just wanted to go back to the optimization in Canada.

<unk> talked a little bit about the uniqueness of the region could you maybe talk to how does that impact the deployment of the optimization and then more importantly relative to say that you asked has the scale difference in Canada versus the U S and how that deployment in the go forward. Thank you.

<unk> sits between careers and package handlers, but so it's a very important step for us in Canada.

Reduces our cost by about $100 million and.

Only improves our portfolio and service differentiation. Thank you for the question Allison.

Yes, Allison. Thank you for your question of course, Canada is a unique market and we're taking a different approach there than the market by market approach, we're taking the U S. The Canadian population is heavily concentrated in a few key geographies and the volume is split roughly 50 50 between extra some ground.

The next question will come from Jordan <unk> with Goldman Sachs. Please go ahead.

Yes, hi, thanks.

So we made the decision to consolidate everything under express and is the right time to take these steps because we will begin in April 2024, and completed by September of 2024.

You gave some parameters for the EPS range 16, 15 to 18 50, <unk> mentioned in the second half.

What what.

What it would mean, if the macro sort of accelerated in terms of the revenue side, but I'm sort of curious.

It's very important that you understand that this is so unique to Canada, because we are going to take a market by market approach in the United States and we have a hybrid in the United States between careers and package handlers, but so it's a very important step for us in Canada.

As you think about the first half of the fiscal year in the second half of the years away can you give a sense.

At the midpoint the proportion of EBIT in both halves, because I suspect that that's more of a second half acceleration with the costs in the economy.

It reduces our cost by about $100 million and.

Donnelley improves our portfolio and service differentiation. Thank you for the question Allison.

Sure Jordan. This is Mike So let me, let me break that down to a couple of elements.

First.

The demand projection, we're talking about for the second half of the year would be relative to.

The next question will come from Jordan <unk> with Goldman Sachs. Please go ahead.

What we have been currently experiencing so thats the degree of uncertainty there in terms of how that flows going to the back half of the year in the front half of the year keep in mind that the significant inflection that we saw last year. It was very late in the first quarter with.

Yes, hi, thanks.

You gave some parameters for the EPS range 16, 50, 18, 15 mentioned in the second half.

What what.

What it would mean, if the macro sort of accelerated in terms of the revenue side, but I'm sort of curious.

That most pronounced at express so we will be lapping that for the first quarter and in addition.

As you think about the first half of the fiscal year in the second half of the years away can you give a sense.

At the midpoint the proportion of EBIT in both halves, because I suspect that that's more of a second half acceleration with the costs in the economy.

The trail off in freight volume accelerated into the mid to upper teens later in the in the calendar year as well largely in the falls when that started so you got to think about the first quarter considerations. There as you put the whole year together in our modeling but in terms of.

Sure Jordan. This is Mike So let me, let me break that down into a couple of elements first.

The demand projection, we're talking about for the second half of the year would be relative to the.

The outlook overall.

We're not projecting any material inflection in the in the demand environment to get to that point, there that you've referenced.

The next question will come from Jon Chappell with Evercore ISI. Please go ahead.

Thank you good afternoon.

That most pronounced at express so we will be lapping that for the first quarter and in addition.

Sticking with you on the slide 17, the 300 million of revenue net of cost increases is there any way to break down how much of that is volume versus price and if it is more kind of price driven that $2 7 billion of variable cost you took out this year, how much do you have adding back in fiscal 'twenty four.

The trail off in freight volume accelerated into the mid to upper teens later in the calendar year as well largely in the falls when that started so you got to think about the first quarter considerations. There as you put the whole year together in our modeling but in terms of.

Hi, John Let me let me.

I'll take a swing at that here. So youll look the way we have framed this is that our expectation is for continued but moderating underlying inflation. So what we illustrated here in this midpoint scenario is positive contribution beyond inflation amidst a muted demand growth since.

The outlook overall.

We're not projecting any material inflection in the in the demand environment to get to that point, there that you've referenced.

The next question will come from Jon Chappell with Evercore ISI. Please go ahead.

<unk>.

But obviously on top of that the drive savings or greater than the nonrecurring headwinds so.

Thank you good afternoon.

Sticking with you on the slide 17, the $300 million revenue net of cost increases is there any way to break down how much of that is volume versus price and if it is more kind of price driven that $2 7 billion of variable cost you took out this year, how much do you have adding back in fiscal 'twenty four.

Again as <unk> mentioned, we will see moderating volume declines as we move through the year here, but at the same time.

The degree of yield increases that we saw last year are not going to continue into.

Into this year.

Okay.

The next question will come from Brian <unk> with Jpmorgan. Please go ahead.

Hi, John Let me, let me take a swing at that here. So youll look the way we have frame. This is that our expectation is for continued but moderating underlying inflation. So what we illustrated here in this midpoint scenario is positive.

Hey, good evening, thanks for taking the question.

<unk> can you just talk about any signs of demand destruction or trade down in this uncertain environment, you mentioned, one customer, making a change I think it was within the U S Air freight I believe it was and then.

Contribution.

Beyond inflation amidst a muted demand growth scenario.

<unk> can you just talk about if youre seeing any diversions from Vps network that might be driving some of this month on month incremental gains in terms of ground.

But obviously on top of that the drive savings or greater than the nonrecurring headwinds so.

Again as <unk> mentioned, we will see moderating volume declines as we move through the year here, but at the same time.

Ground and express thank you.

Okay, I think I got all that Bryan let me get a couple of questions, let's start with that the last part first so I think the question was are we seeing any benefit from the UBS labor negotiation for the short answer and then Q4, we did not see any material benefit because of those discussions and we have not planned for.

The degree of yield increases that we saw last year are not going to continue into.

Into this year.

Okay.

The next question will come from Brian <unk> with Jpmorgan. Please go ahead.

Or any benefit moving into fiscal year 'twenty for what I can tell you is that this has opened a lot of doors, we're having a lot of great conversations with legacy <unk> customers and with a really strong and we feel really good about the sales pipeline because of the strong value proposition, we have versus our primary <unk>.

Hey, good evening, thanks for taking the question.

<unk> can you just talk about any signs of demand destruction or trade down in this uncertain environment, you mentioned, one customer, making a change I think it was.

U S Air freight I believe it was and then.

Can you just talk about if youre seeing any diversions from Vps network that might be driving some of this month on month incremental gains in terms of background.

<unk> I think the other question was about the next <unk> are we seeing any customers make trades within the portfolio, where we're seeing that most pronounced and we have planned for it to mikes point its in our range accounted for is in Asia.

Ground and express thank you.

Okay, I think I got all that Brian I think you had a couple of questions, let's start with that the last part first so I think the question was are we seeing any benefit from the UBS labor negotiation for the short answer I think Q4, we did not see any material benefit because of those discussions and we have not planned for.

Obviously capacity has come back relative to demand and we did re open our ie product in the fourth quarter that has performed well and actually I'm really pleased with the performance that I'm seeing from the <unk>.

Asia Pacific team and our sales pipeline, but that's where we've seen the biggest shift.

The next question will come from Jack Atkins with Stephens. Please go ahead.

Great. Thank you for taking my question. So I guess, maybe if I could at two parter here the guidance itself. So I think the bottom end, Mike if the way you described it if I understood. It correctly contemplates the operating environment remains as it is right now.

<unk> I think the other question was about the next <unk> are we seeing any customers make trades within the.

If we were to see things deteriorate in terms of just underlying customer demand is.

<unk>, where we're seeing that most pronounced and we have planned for it to mikes point its in our range accounted for is in Asia Avia.

As the company prepare to maybe pull forward some of the drive saves.

Savings.

From FY 'twenty five in FY 'twenty four is that even really plausible at this point. If you maybe you could talk about that and then for <unk> for the second part of the question is the $800 million of international export yield pressure that you guys are going to be seeing this year is that kind of fully capture sort of getting back to sort of pre COVID-19 levels there.

Obviously capacity has come back relative to demand and we did re open our I E product in the fourth quarter that has performed well and actually I'm really pleased with the performance that I'm seeing from the Asia Pacific team and our sales pipeline, but that's where we've seen the biggest shift.

Again, thanks for the two parter.

The next question will come from Jack Atkins with Stephens. Please go ahead.

Well I appreciate the insight.

All right Jack will give you a special pass them for on the on the low end there I characterize that flattish revenue year over year, so that would be the low end of our expectation, but in terms of how we navigate and manage through that.

Great. Thank you for taking my question. So I guess, maybe if I could at two parter here the guidance itself. So I think the bottom end, Mike if the way you described it if I understood it correctly contemplates the operating environment.

<unk> remains as it is right now.

The flexibility that Raj mentioned too that we are incorporating into the network is allowing us to then react to that and adjust and again point to the tremendous.

We were to see things deteriorate in terms of just underlying customer demand.

As the company prepare to maybe pull forward some of the drive saves.

Savings.

From FY 'twenty five into FY 'twenty four is that even really plausible at this point. If you maybe you could talk about that and then for <unk> for the second part of the question is the $800 million of international export yield pressure that you guys are going to be seeing this year is that kind of fully capture sort of getting back to sort of pre COVID-19 levels there.

The progress we've made and the results you've seen at ground in the last few quarters of material volume declines yet improve margins and profitability and you saw in the last quarter here Express.

As mitigating the flow through from the reduced demand. So we will move with with great urgency should that be below our range of expectations and let me just jumping on that before I turn it over to Brie here. So it's a simple 1% to three formula at 1%, where the low end of the range of 2% we are in the middle.

Again, thanks for the two parter, but.

Well I appreciate the insight.

Hi, Jack will give you a special pass them for on the on the low end there I characterize that flattish revenue year over year, so that would be the low end of our expectation, but in terms of how we navigate and manage through that.

3%, where the higher end of the range in terms of revenue growth now to go beyond that.

The flexibility that Raj mentioned too that we are incorporating into the network is allowing us to then react to that and adjust and again point to the tremendous.

We've become non linear in terms of significant operational leverage so yeah drivers working and we have flexibility to pull additional levers as we need to <unk>.

Thanks Raj So Jack the short answer is yes that we have planned for the $800 million impact this fiscal year and then as we lap that impact we will be able to build back from there. So the short answer is yes.

The progress we've made and the results you've seen at ground in the last few quarters of material volume declines yet improve margins and profitability and you saw in the last quarter here Express.

The next question will come from Chris Wetherbee with Citigroup. Please go ahead.

As mitigating the flow through from the reduced demand. So we will move with with great urgency should that be below our range of expectations.

Yes.

Just one point.

Hey, guys can we just understand the timing of that is equal to your fiscal 'twenty four how much of that coming I guess <unk> or in the first half and how much would be spread out over the rest of the year.

And let me just jumping on that before I turn it over to Brie here. So it's a simple 1% to three formula at 1%, whereas the low end of the range of 2%. We are in the middle of a 3% where the higher end of the range in terms of revenue growth now to go beyond that as we become non linear in terms of significant operational leverage so yeah drivers working and we have flexibility to pull additional levers.

Sure Chris This is Mike.

Of the $1 8 billion. It is a sequential build as we go through we continue with the discipline and rigor of the drive framework.

So as certain things are implemented during the year, we won't get the full run rate of that because there is a continuous flow.

As we need to <unk>.

Of initiative. So it will be the least amount of that 1.8 will be in the first quarter ended a build as we as we go through the year and then that gives us the.

The next question will come from Chris Wetherbee with Citigroup. Please go ahead.

The run rate momentum and then to get to the 4 billion fully by FY 'twenty five.

Yeah, maybe just over 1 billion cost say guys can we just understand the timing of that as we go through fiscal 'twenty four how much of that comes I guess <unk> or in the first half and how much should be spread out over the rest of the year.

Okay.

The next question will come from Brandon <unk> with Barclays. Please go ahead.

Yes, Thank you and good afternoon.

I think in your prepared remarks, you said that you have already transitioned something like 20 markets to one Fedex operation, but not every market is the same can you elaborate on that all of it and how is this hybrid model going to work in the states, where you do have overlapping contractors and potentially employee drivers.

Sure Chris This is Mike.

Of the $1 8 billion. It is a sequential build as we go through.

<unk> with the discipline and rigor of the drive framework.

So as certain things are implemented during the year, we won't get the full run rate of that because there is a continuous flow of initiative. So it will be the least amount of that one eight will be in the first quarter ended a build as we as we go through the year and then that gives us the <unk>.

Yes, Brandon.

The markets that we have.

Transitioned over or we are in Alaska, we were working through Hawaii and certain other markets in Minneapolis. So we've learned a lot in this process from technology from facilities and people and the hybrid model is that in some markets we will have.

The run rate momentum in then to get to the 4 billion fully by FY 'twenty five.

Okay.

Korea is in some markets we have.

The next question will come from Brandon <unk> with Barclays. Please go ahead.

Contractors, so those things will be determined with daily be data driven and daily work through with our people first PSP philosophy and as I said. We go this is going to take a little bit of time as we as we told you, but I'm glad we're making the progress we're making already thank you.

Yes, Thank you and good afternoon Raj I think in your prepared remarks, you said that you have already transitioned something like 20 markets to one Fedex operation, but not every market is the same can you elaborate on that all of it and how is this hybrid model going to work in the states, where you do have overlapping contractors and potentially employee drivers.

The next question will come from Tom <unk> with UBS. Please go ahead.

Yes, good afternoon, so Raj if I take a look at what happened last kind.

Thank you.

Yes, Brandon.

Kind of August September.

Markets that we have.

Outcome was quite a bit different than you expected I think youre international fell off quite a bit maybe some other things and I think the way you guided looking forward. If we look at the results in November quarter in February quarter.

Transitioned over or we are in Alaska, we were working through Hawaii in certain other markets Minneapolis. So we've learned a lot in this process from technology from facilities and people and the hybrid model is that in some markets we will have.

You set a bar that was achievable maybe you maybe you just executed a little better.

Korea is in some markets we have we have.

How do you think about the guidance that youre, giving us for fiscal 'twenty for <unk>.

<unk> talked about the different macro assumptions in revenue but.

Is there some element of having a conservative bar, where you could potentially do better on cost or maybe pricing comes in a bit better.

Just kind of reflecting what seem to be a pattern of giving yourself a little bit of room to.

The next question will come from Tom <unk> with UBS. Please go ahead.

To overachieve in the last couple of quarters. Thank you.

Yes, good afternoon, so Raj if I take a look at what happened last.

Tom Firstly, let me say this much as I said in my prepared remarks was the first time in the history of Fedex that's in the Fedex ground, where the volumes decline in our operating margin expanded. So clearly this is beyond just flexing for volume and we are this is really drive taking effort.

Kind of August September the.

Outcome was quite a bit different than you expected I think your international fell off quite a bit maybe some other things and I think the way you guided looking forward. If we look at the results in November quarter in February quarter.

You set a bar that was achievable maybe you.

What effect as well. So this is we are just very very pleased with how John and his team are performing well.

Maybe you just executed a little better.

How do you think about the guidance that youre, giving us for fiscal 'twenty four you've talked about the different macro assumptions in revenue but.

In ground and Oh by the way I'll give kudos to the extra steam and Richard Siem as well as we have started to see significant improvement in the in the fourth quarter to your question about the macro so when we talked in September and we pointed to three things, we said that the industrial economy was slowing down.

Is there some element of having a conservative bar, where you could potentially do better on cost or maybe pricing comes in a bit better.

Just kind of reflecting what seem to be a pattern of giving yourself a little bit of room to.

To overachieve in the last couple of quarters. Thank you.

And because of inflation interest rates and slowdown in global trade, we said that the consumer spending spending was shifting to services versus goods and then thirdly, there was an e-commerce reset coming out of.

Tom Firstly, let me say this much.

Said in my prepared remarks, it's the first time in the history of Fedex, that's in the Fedex ground, where the volumes decline in our operating margin expanded. So clearly this is beyond just flexing for volume and we are and this is really drive taking effort is what effect as well. So this is we are just very.

Coming out of the pandemic, where all of those three things happen and they are detrimental to volume for their all the whole industry. So we are roughly the same.

Very pleased with how John and his team are performing.

Performance on the calendar quarter that is comparable across the across the sector.

In ground and Oh by the way I'll give kudos to the extra steam and Richard <unk> as well as we have started to see significant improvement in the in the fourth quarter to your question about the macro so when we talked in September and we pointed to three things, we said that the industrial economy was slowing down.

If you look ahead here at this point.

One and two are basically along the same lines you have seen in the last few months I think on the ecommerce side, we expect to see growth now I think the reset is probably complete end, though e-commerce is going to grow.

And into the next next.

Okay. So the next business FY 2004 timeframe. So we're watching this very carefully.

Visibility, especially in the second half is very difficult given the dynamic circumstances, we're seeing we will see how the industrial production goes we'll see how.

Coming out of the pandemic, where all of those three things happen and they are detrimental to volume for that all the <unk>.

GDP and trade goes and we'll follow the inventory.

Stocking and ended inventory to sales ratio very carefully and but at the end of the day. We are focused on the things. We can control. We made a determination that we are going to come out of those stronger than we went in and is exactly what we're doing and I'm very very pleased with the way we're executing drive so sorry over a long answer Tom but I don't want to give you a full perspective.

Industry. So we are roughly the same.

Performance on the calendar quarter that is comparable across the across the sector.

If you look ahead here at this point.

One and two are basically along the same lines you have seen in the last few months I think.

On the E Commerce side, we expect to see growth now I think the reset is probably complete end, though e-commerce is going to grow.

Yes.

And Tom This is Mike I wanted to amplify one aspect there as well to just highlight and we talked about ground.

And into the next next.

Okay. So the next business FY 2004 timeframe. So we're watching this very carefully.

And the that the progress of the numbers there, but there has been tremendous progress at express amidst the headwinds here. So you talked that you ask about the guidance broadly, but keep in mind, all $800 million of that.

The ability, especially in the second half is very difficult given the dynamic circumstances, we're seeing we will see how the industrial production goes we'll see how.

International headwind is a.

At express.

GDP and trade goes and we'll follow the inventory.

Nonrecurring headwind a significant component of the variable compensation is at express.

Stocking and inventory to sales ratio very carefully and but at the end of the day. We are focused on the things. We can control we made a determination that we are going to.

And the domestic freight headwind that Barry alluded to earlier, that's about $400 million right there as a headwind in 'twenty four so despite all of that.

Come out of those stronger than we went in and is exactly what we're doing and I'm very very pleased with the way we are executing drive so sorry over a long answer Tom but I don't want to give you some perspective there.

Through the discipline and rigor of drive.

And a muted demand environment, we are projecting up margins at express and 24. So again just to reiterate we're looking at this very thoughtfully.

Tom This is Mike I wanted to amplify one aspect there as well to just highlight and we talked about ground and the progress of the numbers there, but there has been tremendous progress at express amidst the headwinds here so.

Our planning to adapt to any further changes in the environment.

The next question will come from Ken <unk> with Bank of America. Please go ahead.

You ask about the guidance broadly, but keep in mind, all $800 million of that inner.

Great Mike if I can just follow up on a couple of thoughts there your thoughts on the scale of improvement at express can you reach mid single digits is is there a kind of a range as you'd put within the target same at ground is that going to reach double digits. If were going up and then magnitude at freight margin if youre looking at declining expectations and then I guess within.

International headwind is a.

At express.

Nonrecurring headwind a significant component of the variable compensation is at express.

And the domestic freight headwinds that Barry alluded to earlier, that's about $400 million right there as a headwind in 'twenty four so despite all of that.

Any thoughts on Europe, and TNT integration within that express.

Got it great. Thanks.

Through the discipline and rigor of drive.

That was a lot certainly like I said, we will see margin improvements at express and ground.

And a muted demand environment, we are projecting up margins at express and 24%. So again just to reiterate we're looking at this very thoughtfully.

In 2000 and for freight will definitely we will see some margin pressure there.

Our planning to adapt to any further changes in the environment.

So I'm going to I'm going to leave it at that the freight will mitigate like I said earlier, we will see the largest margin pressure at freight in Q1 and that will mitigate as we move move through the year.

The next question will come from Ken <unk> with Bank of America. Please go ahead.

Great Mike if I can just follow up on a couple of thoughts there your thoughts on the scale of improvement at express can you reach mid single digits is there a kind of a range as you'd put within that target same at ground is that going to reach double digits. If were going up and then magnitude at freight margin if youre looking at declining expectations and then I guess within.

Similarly, I would expect that express margin improvement to improve to a greater degree beyond.

Q1, as well as they move through the year so.

I'll leave it at that as it relates to Europe, we are absolutely as a component of that express improvement projecting improved profitability in Europe keep in mind that within the drive domains, we've identified $600 million.

Any thoughts on Europe , and TNT integration within that express.

Got it great. Thanks.

That was a lot certainly like I said, we will see margin improvements at express and ground.

<unk> value that we'll realize from the Europe initiatives. There. So we will absolutely see progress on that in 'twenty, four and going forward.

In 2000 and for freight will definitely we will see some margin pressure there.

So I'm going to leave it at that the freight will mitigate like I said earlier, we will see the largest margin pressure at freight in Q1 and that will mitigate as we move move through the year.

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

Hey, Thanks afternoon, So Raj and one of the earlier answers you basically said 123 right for the earnings sensitivity in revenue sensitivity. So that's basically every billion dollars of revenue gets you an extra dollar of earnings is that the right sensitivity to think about.

Similarly, I would expect the express margin improvement to improve to a greater degree beyond.

Q1, as well as we move through the year so.

I'll leave it at that as it relates to Europe , we are absolutely as a component of that express improvement projecting improved profitability in Europe keep in mind that within the drive domains, we've identified $600 million.

Longer term beyond just this year is freight eventually recovers and then just separately the $5 7 billion of Capex. This year. How much is included in aircraft I just wanted to get a sense of what the the Capex could look like in a couple of years when we're spending a lot less on planes. Thank you.

The value that we'll realize from the Europe initiatives. There. So we will absolutely see progress on that in 'twenty, four and going forward.

Okay. It's Scott so first on the aircraft Capex, we came in at about $1 $7 billion in 'twenty three.

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

One 5 billion for 'twenty, four slightly lower than that in 'twenty five and then as Raj said approximately below that even into 'twenty six.

Hey, Thanks afternoon, So Raj and one of the earlier answers you basically said 123 right for the earnings sensitivity in revenue sensitivity. So that's basically every billion dollars of revenue get you an extra dollar of earnings is that the right sensitivity to think about.

That's the that's the aircraft component of it and <unk> got on the one two or three I just wanted to keep the math straightforward here.

A simple one to three formula with the point I wanted to make also is that as it accelerates beyond that then the curve becomes non linear as we have significant operating leverage I think you're the one who call. The opening the jaws of the crocodile then that's kind of what's going to happen.

The next question will come from Conor Cunningham with <unk> Research. Please go ahead.

Everyone. Thank you just on the 24 revenue assumption I'm, a little confused on how that will work with export.

Okay. It's Scott so first on the aircraft Capex, we came in at about $1 $7 billion in 'twenty three.

Yield pressure it just seems like the other lever is going to be.

One 5 billion for 'twenty, four slightly lower than that in 'twenty five and then as Raj said approximately below that even into 'twenty six.

Volumes in general.

Just to be Super clear are you, assuming a year over year increase in 24 at the midpoint.

Just any help there would be it would be would be great. Thank you.

That's the that's the aircraft component of it and <unk> got on the one two or three I just wanted to keep the math straightforward here.

Sure Conor so yes, the assumption at the midpoint as Raj just mentioned would be 2% revenue growth and as you think about the build back from a revenue perspective, it's important to note as I think Mike mentioned earlier in the U S. Domestic as we get late into Q1 early Q2.

You will see volumes domestic express and ground parasol they'll get to flat and then we do anticipate they will build back from their Fedex freight will lag that slightly because as Mike talked about the impact lagged and then when we get into our international business. The 800 is really yield impact we are.

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

Everyone. Thank you just on the 24 revenue assumption I'm, a little confused on how that will work with export.

Yield pressure it just.

Seems like the other lever is going to be.

Volumes in general.

We are anticipating to build back some volume in our international business. This year and again that will happen throughout the year.

Just to be Super clear are you, assuming a year over year increase in 24 at the midpoint.

Just any help there would be it would be great.

So that's yes, 2% is the midpoint and volumes will start to build back throughout the year.

Great. Thank you.

Yeah.

The next question will come from Jeff Kauffman with vertical research partners. Please go ahead.

Thank you very much Brian I, just want to follow up on that if I can.

You gave you a range of outcomes, but we do have higher interest rates credit cards, I know theres been a lot of chatter about school loans being paid later this year and that may be a negative for holiday season and E. Commerce as you look around the world. Let me phrase this a little differently than you've been answering.

We'll see volumes domestic express and ground parasol they'll get to flat and then we do anticipate they will build back from their Fedex freight will lag that slightly because as Mike talked about the impact lagged and then when we get into our international business. The 800 is really yield impact we are.

Where our potential green shoots starting to show up in your network or reasons for optimism and where are we seeing let's forget the international yields but more in terms of activity that youre seeing out there incremental red.

Anticipating to build back some volume in our international business this year and again that will happen throughout the year.

Yes, absolutely it's a fair question so.

So thats, yes, 2% is the midpoint and volumes will start to build back throughout the year.

We planned right now for flattish to single low single revenue growth and Thats really basically on the backdrop of the economy that we're experiencing right now we're all watching the consumer as Raj talked about we are still seeing.

Yeah.

The next question will come from Jeff Kauffman with vertical research partners. Please go ahead.

Thank you very much Brian I, just want to follow up on that if I can.

You gave your range of outcomes, but we do have higher interest rates credit cards, I know theres been a lot of chatter about school loans being paid later this year and that may be a negative for holiday season and E. Commerce as you look around the world. Let me phrase this whole differently than you've been answering where our potential green shoots starting to show up in your network.

Consumer strength here in the United States, but we are seeing in E. Commerce reset so from a green shoots perspective, one of the things that we're going to be looking at is that E. Commerce growth is sitting at 7% to 8%. It's important to note our percentage of that is closer to 2% to 3% because we don't play in grocery and and obviously with.

Eric or reasons for optimism and where are we seeing let's forget the international yields but more in terms of activity that youre seeing out there incremental red.

And that seven to eight is also buy online pickup in store. So we will be keeping an eye on that consumer strength here in the United States and would love to see as we head into peak a little bit of a different shift we have not seen that yet, but we'll be watching for it and then.

Yes, absolutely it's a fair question so.

We we planned right now for flattish to single low single revenue growth and Thats really basically on the backdrop of the economy that we're experiencing right now we're all watching the consumer as Raj talked about we are still seeing.

Other thing Afirma in Asia perspective is we're going to watch closely on Asia reopening.

We haven't seen significant uptick there, but if that happens to roger's point that will absolutely be a tailwind for us and then honestly our own execution in Europe, I'm really pleased with the service that the European team is delivering with about some green shoots in the domestic markets in Europe, and we're working that really really hard from an.

<unk> and a sales perspective, so there are definitely some green shoots we're working on.

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

Within that seven to eight is also buy online pickup in store. So we will be keeping an eye on that consumer strength here in the United States and would love to see as we head into peak a little bit of a different shift we have not seen that yet, but we'll be watching for it and then the other thing Afirma in Asia perspective is we're going to watch closely on Asia REO.

Thanks, Operator, hi team so easy question.

I think the pilots are running on a new contract and I'm wondering if the cost increase associated with that is included in the guidance and the other part of the question is as you retire year older aircraft are you also retiring pilots or is there an excess of pilot.

<unk>.

We haven't seen significant uptick there, but if that happens to roger's point that will absolutely be a tailwind for us and then honestly our own execution in Europe , I'm really pleased with the service that the European team is delivering with back some green shoots in the domestic markets in Europe , and we're working that really really hard from an opera.

Okay.

Couple of questions. There so first as it relates to the aspects of the pilot tentative agreement there.

A component of that is a payment upon implementation. So we've previously accrued for that date of signing payment there and then within the guidance here, we have the FY 'twenty four scale increases and then within the pension figures I gave you earlier that incorporates the.

<unk> and a sales perspective, so there are definitely some green shoots we are working on.

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

Thanks, Operator, hi team.

So easy question.

<unk> as it relates to that as well so that's fully incorporated into the outlook there.

I think the pilots who are building on a new contract and I'm wondering if the cost increase associated with that is included in the guidance and the other part of the question is as you retire your older aircraft or are you also retiring pilots or is there an excess of pilot.

As we mentioned earlier, we're expecting the park 29 additional aircraft during the year 99 of which will be permanently retired.

Okay.

The next question will come from Scott Schneeberger with Oppenheimer. Please go ahead.

Okay.

Couple of questions. There so first as it relates to the aspects of the pilot tentative agreement there.

Thanks, very much good afternoon, I'm going to keep it on the airplanes.

Just curious on an on right.

A component of that is a payment upon implementation. So we've previously accrued for that date of signing payment there.

If you could kind of frame the answer and where you were a year ago, where you are now and where you anticipate being in a in a quarter or two with regard to taking out slides Trans Pacific Trans Atlantic Asia Europe.

Then within the guidance here, we have the FY 'twenty four scale increases and then within the pension figures I gave you earlier that incorporates the considerations as it relates to that as well so that's fully incorporated into the outlook there.

We could just get an update on that.

What you've done and what may come going forward. Thanks.

Scott will look as Raj mentioned flight hours were down 12% in the fourth quarter, which is greater than the volume decline. So we've taken significant.

And as we mentioned earlier, we're expecting the park 29 additional aircraft during the year 99 of which will be permanently retired.

Flying out of the network, we've said that that was anticipated once the supply demand <unk>.

Okay.

The next question will come from Scott Schneeberger with Oppenheimer. Please go ahead.

Thanks, very much good afternoon, I'm going to keep it on the airplanes.

Strengths were east and so that is the decision to then retire these aircrafts because we continue to reduce the.

Curious on.

Right.

If you could kind of frame the answer and where you were a year ago, where you are now and where you anticipate being in a in a quarter or two with regard to taking out slides transpacific Trans Atlantic Asia Europe , If we could just get an update on that for what you've done and what may.

Trans Pacific and Trans Atlantic flying to match demand and we'll continue to lean into that as well as utilizing the.

The flexibility.

Flexibility of capacity in the market.

Okay.

The next question will come from David Vernon with Bernstein. Please go ahead.

Thanks for fitting me in here so Mike in the scenarios you've outlined for US is there a scenario where margins on a consolidated basis don't get better on an adjusted basis in 2023 or are we looking for margin expansion and then <unk> as you think about the <unk>.

Come going forward. Thanks.

Scott will look as Raj mentioned flight hours were down 12% in the fourth quarter, which is greater than the volume decline. So we've taken significant.

Large customer change in behavior and so we're talking about the post office are we expecting more of that.

Flying out of the network. We have said that that was anticipated once the supply demand constraints were east and so that is the decision to then retire these aircrafts because we continue to reduce the.

Priority mail revenue to decline given what <unk> said publicly around his desire to ground some of that traffic and then how do we think about that sort of in connection with the <unk>.

<unk> also to kind of reduce the fly network a bit.

Trans Pacific and Trans Atlantic flying to match demand and we'll continue to lean into that as well as utilizing the.

Yeah, David the short answer is we're projecting margin improvement with the outcomes here that we have highlighted in the specific drivers within that.

The flexibility.

Flexibility of capacity in the market.

Okay.

Yeah. So the customer we are talking about is the United States Postal service, obviously, we've had a long and productive and profitable relationship with the post office you're correct. There are 10 year strategic plan is to track more volume and fly last so to Mike's point earlier, we have accounted that for that in this year's fiscal range.

The next question will come from David Vernon with Bernstein. Please go ahead.

We are committed to meeting the service obligations in that contract, which does and in September 2024, and so we've accounted for that headwind at that point it will become a tailwind as we either renegotiate or we will adjust our network accordingly.

Large customer change in behavior and so we're talking about the post office are we expecting more of that.

Priority mail revenue to decline given what <unk> said publicly around his desire to ground some of that traffic and then how do we think about that sort of in connection with the <unk>.

<unk> also to kind of reduce the fly network a bit.

The next question will come from Stephanie Moore with Jefferies. Please go ahead.

Yes, I mean, David the short answer is we're projecting margin improvement with the outcomes here that we have highlighted in the specific drivers within that.

Great. Good evening this message Youll have a logical Stephanie thanks for squeezing me Dan here I'll keep it to one my question is maybe for Mike its a bit in the weeds looking at the ground operating profit expansion purchased transportation costs are obviously down big year over year at 40% I think it's the lowest percent of revenue in 10 years or something with the softer macro so how should we think about PT, particularly.

Yeah. So the customer we are talking about is the United States Postal service, obviously, we've had a long and productive and profitable relationship with the post office you're correct. There are 10 year strategic plan is to track more volume and fly less so to Mike's point earlier, we have accounted that for that in this year's fiscal range.

Really in the context of a volume rebound and the need to maybe source third party capacity, if the macro improves, especially as more costs coming out of the network. Thank you.

We are committed to meeting the service obligations in that contract, which does end in September 2024, and so we've accounted for that headwind at that point it will become a tailwind as we either renegotiate or we will adjust our network accordingly.

Okay, Joe well in my remarks, I mentioned, how one of the drivers of the margin expansion and cost control. The ground was lower line haul expense. So we moved a lot of high cost ad hoc.

External line haul spend into our <unk>.

The next question will come from Stephanie Moore with Jefferies. Please go ahead.

Scheduled network as we optimize that and lower rates on the planned line haul purchase transportation. So.

Again, it's all part of the broader optimization of networks Holistically, both pickup and delivery line haul as well as the facility.

Facility operations.

Okay.

The next question will come from Bruce Chan with Stifel. Please go ahead.

Really in the context of a volume rebound and the need to maybe source third party capacity, if the macro improves, especially as more costs coming out of the network. Thank you.

Hey, Thanks, and good evening and congrats Mike on the retirement.

Just want to ask about the LCL side since we haven't talked about it too much.

Okay, Joe well in my remarks, I mentioned, how one of the drivers of the margin expansion and cost control. The ground was lower line haul expense. So we moved a lot of high cost ad hoc.

Recently had a large competitor announce some material solvency concerns and I just wanted to see what the playbook here is if we do see a major competitor exit.

Would you rethink some of the facility closures and furloughs at that point or even just with the stronger than expected LTM market.

External line haul spend into our <unk>.

Scheduled network as we optimize that and lower rates on the planned line haul purchase transportation. So.

Sure and thanks, Thanks for that Bruce, but yes on the LDL side look you've seen how fast the team reacted to declining volume environment earlier in the year and we still we're expanding margins that accelerated so that was more challenging.

Again, it's all part of the broader optimization of networks Holistically, both pickup and delivery line haul as well as the assortment facility operations.

So look we will continue to look to optimize the facilities. It's a holistic perspective, so the 29 facilities, where smaller ones that weren't the most efficient so as we lean into what could be a demand recovery of that volume could be accommodated within the larger facilities and that just is that.

The next question will come from Bruce Chan with Stifel. Please go ahead.

Hey, Thanks, and good evening and congrats Mike on the retirement.

Just want to ask about the LCL sites as we haven't talked about too much you recently had a large competitor announce some material solvency concerns and I just wanted to see what the playbook here is if we do see a major competitor exit.

Much more incremental contribution as and when that comes back.

Would you rethink some of the facility closures and furloughs at that point or even just with the stronger than expected LTM market.

And the final question will come from Amit Mehrotra with Deutsche Bank. Please go ahead.

Thanks, Hi, everyone, Mike I know Theres a lot of questions on the long term and 12 month period, Thats hard I get it but maybe help us calibrate expectations for the near term do you expect.

Express and ground profit to be up in the next quarter I know, there's seasonality, but the question Theres, Obviously drive savings and then Raj the decision to go external for the CEO search that obviously wasn't lost upon me that that external criteria.

Big deal for Fedex, Obviously, I'm wondering if you can talk about what your what the board what Youre trying to achieve there in terms of hiring somebody from the outside which really hasn't happened before for such a senior position. Thank you.

Much more incremental contribution as and when that comes back.

And the final question will come from Amit Mehrotra with Deutsche Bank. Please go ahead.

Alright. This is Mike. So so first I'll reiterate as I mentioned earlier freight margins will be down for the year and that will be most pronounced in Q1.

Thanks, Hi, everyone, Mike I know Theres a lot of questions on the long term and 12 month period, Thats hard I get it but maybe help us calibrate expectations for the near term do you expect.

And at express as we saw the significant inflection in demand were very late in the first quarter last year.

<unk> Express we will see this.

Small is year over year margin change in Q1 relative to the rest of the year. So.

I'll leave it at that in the.

Go from there.

Yes.

Big deal.

Well, let me again, thank Mike for just incredible work over the last 18 years and particularly in the last three and we have a fantastic finance team and our great organization from a succession planning, we're looking at somebody who has deep financial expertise, but also strong operational capabilities and help lead.

Fedex, obviously I'm wondering if you can talk about what your what the board what Youre trying to achieve there in terms of hiring somebody from the outside which really hasn't happened before for such a senior position. Thank you.

Hi, Matt This is Mike. So so first I'll reiterate as I mentioned earlier freight margins will be down for the year and that will be most pronounced in Q1.

Lead Fedex through our drive transformation program. So again, thank you for your question.

And at express as we saw the significant inflection in demand with very late in the first quarter last year. So express we will see this.

This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks. Please go ahead.

Thank you operator.

Before we close I wanted to give Mike an opportunity to say a few words.

Small is year over year margin change in Q1 relative to the rest of the year. So.

Thank you Raj the last 18 years at Fedex has been a tremendous experience and it was my great honor to serve as CFO for the last three years.

I'll leave it at that and go from there.

Yes first of all again, thank Mike for just incredible work over the last 18 years and particularly in the last three.

Who would have known when I was named as this position in March of 2020.

What we and the world we're about to face.

And we have a fantastic finance team and a great organization from a succession planning, we're looking at somebody who has deep financial expertise, but also strong operational capabilities and help.

But this team rose to the occasion again and again through many obstacles and we are now well positioned for the future.

I want to express my gratitude to the entire Fedex team and the finance team in particular for their dedication throughout all of the change.

Lead Fedex through our drive transformation program. So again, thank you for your question.

This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks. Please go ahead.

To friend Raj for their vision and leadership.

And most importantly to my wife, Jane and our sons for their support along the way.

Thank you operator.

I am also value the engagement with this audience and sharing the exciting plans and bright future for Fedex.

Before we close I wanted to give Mike an opportunity to say a few words.

Thank you Raj the last 18 years at Fedex has been a tremendous experience and it was my great honor to serve as CFO for the last three years.

As I start my next chapter I leave knowing that Fedex is in a strong position.

Couldn't ask for any more than that.

<unk>.

Who would have known when I was named as this position in March of 2020, we and the world we are about to face.

Thank you Mike.

In closing I also want to thank our team members for their hard work and dedication as we build the worlds modest logistics network.

But this team rose to the occasion again and again through many obstacles and we are now well positioned for the future.

We made tremendous progress on our transformation efforts in fiscal year 'twenty three and the team is already moving with urgency.

I want to express my gratitude to the entire Fedex team and the finance team in particular for their dedication throughout all of the change.

We enter fiscal year 'twenty four.

We know there is significant opportunity ahead, and I am confident in our ability to continue to execute thank.

So Fred Raj for their vision and leadership.

And most importantly to my wife, Jane and our sons for their support along the way.

Thank you very much.

I am also value the engagement with this audience and sharing the exciting plans and bright future for Fedex.

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

As I start my next chapter I leave.

Leave knowing that Fedex is in a strong position.

Couldn't ask for any more than that.

<unk>.

Thank you Mike.

In closing I also want to thank our team members for their hard work and dedication as we build the worlds modest logistics network.

We made tremendous progress on our transformation efforts in fiscal year 'twenty three and the team is already moving with urgency as we enter fiscal year 'twenty four.

We know there is significant opportunity ahead, and I am confident in our ability to continue to execute thank.

Thank you very much.

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

The conference has now concluded thank you.

Q4 2023 FedEx Corp Earnings Call

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