Q4 2025 FedEx Corp Earnings Call
Good.
And welcome to the Fedex fourth quarter fiscal 2025 earnings call.
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Speaker Change: Now I'd like to turn the conference over to Fedex, President and CEO Raj Superman Marty I'm. Please go ahead.
Speaker Change: Thank you operator.
Speaker Change: Before we begin.
Speaker Change: I wanted to take a few minutes.
Speaker Change: <unk> someone.
Speaker Change: A great deal to this company.
Speaker Change: The business community.
Speaker Change: It's been about family.
Speaker Change: And to me personally.
Speaker Change: It feels strange to be here with you all so soon after his sudden passing.
Speaker Change: And it is.
Speaker Change: Difficult to put into words.
Speaker Change: The tremendous loss fell.
Speaker Change: Belt by all who knew.
Speaker Change: Rick W. Smith.
Speaker Change: But Fred was the Madden grounded by our mission.
Speaker Change: And he would tell us to stay focused on the business.
Speaker Change: And keep marching forward.
Speaker Change: And so we will do just that.
Speaker Change: But first.
Speaker Change: I wanted to share a few thoughts.
Speaker Change: Fred was more than a business leader.
Speaker Change: As a visionary.
Speaker Change: Revolutionized the delivery in this.
Speaker Change: It was a man.
Speaker Change: Who led with integrity.
Speaker Change: And inspire others.
Speaker Change: This belief in people.
Speaker Change: This relentless pursuit of excellence and his commitment to connect people and possibilities.
Speaker Change: Built one of the world's most successful companies over the last five decades.
Speaker Change: And his legacy will.
Speaker Change: It will be felt for decades to come.
Speaker Change: On a personal note.
Speaker Change: I will miss his strategic counsel.
Speaker Change: Impeccable character.
Speaker Change: And sharp wit.
Speaker Change: He taught me that leadership.
Speaker Change: It's about service and not titles.
Speaker Change: He challenged me.
Speaker Change: Think bigger.
Speaker Change: Act Boulder.
Speaker Change: And always always put our people and our customers at the center of everything we do.
Speaker Change: I feel tremendously fortunate have spent 35 34 years learning from one of the most brilliant minds in our country's history.
Speaker Change: Please join me in extending heartfelt condolences to the entire Smith family during this difficult time.
Speaker Change: As we move forward.
Speaker Change: We will honor his legacy by continuing to build the company he loves.
Speaker Change: With the same passion and purpose inspired us inspires us all.
Speaker Change: Now consistent with our succession plan.
Speaker Change: Yesterday, the board elected Rod Martin Chairman of the board of Fedex Paul.
Speaker Change: Brian is a highly regarded business leader and strategic thinker, who is intimately familiar with the business having previously served as our vice chairman.
Speaker Change: With that I'm going to turn the call over to Jenny.
Jenny: Thanks Raj.
Jenny: Good afternoon, and welcome to Fedex Corporation's fourth quarter earnings Conference call.
Jenny: Our fourth quarter earnings release, and Stat book are on our website at investors that Fedex dotcom.
Jenny: This call and the accompanying slides are being streamed from our website.
Jenny: During our Q&A session callers will be limited to one question to allow us to accommodate all those who would like to participate.
Jenny: Certain statements in this conference call maybe considered forward looking statements as defined in the private Securities Litigation Reform Act of $19 95.
Jenny: Such forward looking statements are subject to risks uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements.
Jenny: For additional information on these factors please refer to our press releases and filings with the SEC.
Jenny: This presentation also includes certain non-GAAP financial measures. 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.
Raj Subramaniam: Joining us on the call today are Raj Subramaniam, President and CEO, <unk>, <unk> Executive Vice President and Chief customer Officer, and John <unk> Executive Vice President and CFO and now I'll turn the call back over to Raj.
Jenny: Yes.
Jenny: Thank you Jenny.
Speaker Change: I want to start by commending our team for their strong efforts in execution.
Speaker Change: We delivered a solid finish to FY 'twenty five with another quarter of adjusted operating income growth and adjusted operate operating margin expansion, despite a challenging demand environment.
Speaker Change: This performance reflects the progress we've made on our strategic transformation, which continues to position Fedex for long term value creation.
Speaker Change: 2025, we delivered on our $2 $2 billion drive structural cost reduction.
Speaker Change: This enabled us to achieve our two year $4 billion drive target compared to the FY2023 baseline.
Speaker Change: We advanced <unk> in FY 'twenty five as you began optimizing larger more densely populated markets.
Speaker Change: We continued to lower our capital intensity.
Speaker Change: And we returned $4 $3 billion in cash to stockholders.
Speaker Change: We achieved all of this in the face of major headwinds.
Speaker Change: Including the exploration of our U S postal service contract.
Speaker Change: Fewer operating days.
Speaker Change: And volatility and uncertainty.
Speaker Change: Later to global trade policy.
Speaker Change: Against this dynamic backdrop.
Speaker Change: I am very proud of our ability to deliver on our targets at.
Speaker Change: Adapt our network to changing trade flows and provide excellent service for our customers.
Speaker Change: Now turning to our consolidated Q4 results.
Speaker Change: Revenue was up 1% year over year, we drew we grew our drive savings sequentially achieved our drive cost reduction target in this quarter.
Speaker Change: This enabled us to grow adjusted operating income by 8% and expand our adjusted operating margin by 60 basis points.
Speaker Change: At Federal Express cooperation.
Speaker Change: Our results demonstrate the operational leverage that we have built into our business through dry.
Speaker Change: On a 1% increase in revenue.
Speaker Change: We grew adjusted operating income by 9%.
Speaker Change: We achieved this result in a weak demand environment with growth largely driven by our deferred services.
Speaker Change: Our performance demonstrates the flexibility of our network and I am confident in the operating results, we can deliver in the industrial economy recovers.
Speaker Change: Consistent with the trends over the last several quarters, our higher margin BTB volumes remained pressured.
Speaker Change: Which affected both FSC and freight results.
Speaker Change: That said, we are encouraged by the sequential improvement at Fedex freight.
Speaker Change: The ability to protect profitability with an operating margin of 28% in Q4.
Speaker Change: The trade related events of the fourth quarter showcase our ability to leverage both the scale and the flexibility of our unrivaled global network supported by insights from the vast amounts of data we collect.
Speaker Change: We are at the center of a global trade ecosystem.
Speaker Change: We connect 99% of the world's e-commerce.
Speaker Change: We moved two trillion dollars worth of goods every year.
Speaker Change: We connected 3 million shippers to more than 225 million consumers.
Speaker Change: And as the world changes.
Speaker Change: Supply chains evolve we benefit from our presence in over 220 countries and territories.
Speaker Change: This uniquely positions us to be a valuable partner to our customers as they navigate shifting demand trends evaluate the impact of tariffs on their businesses and adjust their supply chains accordingly.
Speaker Change: And importantly, our tricolor strategy enables us to adapt our own network faster than ever before as circumstances and the needs of our customers change driving greater efficiency and a better customer experience.
Speaker Change: For example in the fourth quarter.
Speaker Change: We flexed our network to match the demand environment as trade flows shifted.
Speaker Change: We reduced capacity on our Asia Americas lane by more than 35%.
Speaker Change: First week of May compared to April.
Speaker Change: This included reuse, reducing our third party or white tailed capacity by 50%.
Speaker Change: We then continue to adjust our capacity as needed.
Speaker Change: As demand trends evolve throughout the month.
Speaker Change: We exited may with a net capacity a reduction of about 20% versus April.
Speaker Change: We have been introducing other network changes and Asia, allowing us to consolidate from multiple points into a centralized gateway.
Speaker Change: We recently added a direct flight from Singapore to the U S, enabling us to be more efficiently capture increased demand out of southeast Asia.
Speaker Change: We continue to evaluate trade patterns and they're prepared to altra routes given capacity commitments should demand shift with a focus on Asia to Europe, and Asia to Latin America.
Speaker Change: In addition to rapidly adjusting our physical network. Our team has done a remarkable job working closely with our customers and help helping them navigate increasing operational complexities. We continue to apply our digital platform based solutions to effectively address key pain points amid changing global trade policies.
Speaker Change: These solutions support a wide range of stakeholders importers exporters brokers and regulators and they are tightly integrated with our customers' existing workflows, ensuring that critical trade and tariff related work and of course seamlessly and efficiently.
Speaker Change: As you are all aware there is a lot happening outside of Fedex <unk>.
Speaker Change: <unk> policies are evolving and trade patterns are changing.
Speaker Change: What's truly remarkable as a significant way, we have leveraged our technological capabilities and processes to navigate these complexities and operate more efficiently for our customers.
Speaker Change: Network <unk> is the next leg of our structural transformation in this and it is well underway in April we completed the full optimization of Canada, our largest market yet ASP.
Speaker Change: As planned we optimize 45 U S stations in Q4, and we are now picking up the pace.
Speaker Change: On June one we implemented network Dorado or nearly 30 stations across 11 markets.
Speaker Change: And we will optimize another 33 stations across nine markets by the end of this month.
Speaker Change: That means we exited June with roughly $2 5 million average daily volume flowing through network <unk> optimized stations.
Speaker Change: Looking beyond North America, we have made progress in Europe.
Speaker Change: <unk> or drive target.
Speaker Change: That said Europe remains a significant opportunity for long term financial improvement.
Speaker Change: We have been implementing the workforce reduction plan, we announced in June of 2024.
Speaker Change: This was a very difficult but necessary decision for us.
Speaker Change: Leading to about $150 million of savings on an annualized basis in FY 'twenty.
Speaker Change: We have achieved better Andre productivity with sustained improvement in net service levels.
Speaker Change: We have now seen two consecutive years of cost per package reduction in our European business.
Speaker Change: Slide 26, we will focus on further improving on road and in the station productivity bring.
Speaker Change: Bringing new digital experience to our customers and growing market share profitably in the region.
Speaker Change: A quick update on the freight spinoff.
Speaker Change: Last month, we named Brad Martin as Chairman of the board of Fedex freight.
Speaker Change: We also named John Smith, as President and CEO of the Standalone company.
Speaker Change: As many of you know.
Speaker Change: John has deep credit expertise and a strong track record of improving margins and profitability at both Fedex freight and Fedex ground.
Speaker Change: We're moving quickly to announce the rest of our freight leadership team. We recently hired Michael Rogers as Chief Technology Officer Fedex freight.
Speaker Change: Mike brings vast external technology experience, having most recently spend time in the fuel supply and retail sectors.
Speaker Change: Additionally, <unk> will serve as a fedex rates, chief human resources and legal officer.
Eddie: Eddie brings deep expertise from his nearly 30 year career at Fedex, Most recently as corporate Vice President for corporate governance Securities and tax law.
Speaker Change: Mike Lyons was walked in Fedex freight since 2007, or so has achieved specialized services and commercial officer.
Clinton Mccoy: And Clinton Mccoy.
Speaker Change: It was Walter Fedex freight for nearly 30 years will be the chief operating officer.
Speaker Change: I'm confident that this mix of strong external Fedex Corporation, and Fedex freight talent.
Speaker Change: Setup Fedex freight Fedex freight for success.
Speaker Change: Okay.
Speaker Change: Before I wrap up.
Speaker Change: I wanted to provide early perspective.
Speaker Change: On how we're thinking about the current quarter.
Speaker Change: In the year ahead.
Speaker Change: The global demand environment remains volatile.
Speaker Change: Staying close to our customers to help them plan and adapt as they navigate trade policy changes and we are actively match matching our capacity with demand.
Speaker Change: As the environment evolves.
Speaker Change: John will walk through our expectations for the first quarter of this fiscal year.
Speaker Change: We remain focused on what we can control.
Speaker Change: For FY 'twenty, six we expect to achieve $1 billion of <unk>.
Speaker Change: <unk> related savings, which includes drive and network to auto.
Speaker Change: I again want to thank the team for.
Speaker Change: For the innovative and mission critical work that you're doing to make supply chain smarter for everyone.
Speaker Change: This work has resulted in a solid finish to the fiscal year.
Speaker Change: And importantly, it's translating to better outcomes for our customers in a very complex operating environment.
Speaker Change: Now, let me turn the call over to breathe.
Speaker Change: Thank you Raj I am proud of how we are helping our customers navigate this challenging period.
Speaker Change: And I think it's fitting to share <unk> with our founder.
Speaker Change: Just this past Friday, Fred told me how fun it was to watch the teamwork and then he saw in Falcon momentum building in the business he.
Speaker Change: He was excited about our e-commerce value proposition at <unk>.
Speaker Change: Our of our clearance capabilities and of course, the growth in global Airfreight and health care.
Speaker Change: I want to commend the entire organization for our focus on creating bask differentiation and showing up for our customers.
Speaker Change: Delivering the purple promise has served us well for the last 50 years or last quarter and undoubtedly it will serve us well in fiscal year 'twenty sacks.
Speaker Change: Taking a closer look at our Q4 revenue performance.
Speaker Change: Solidago revenue was up 1%.
Speaker Change: 1% increase at Federal Express and a continued weakness as expected at Fedex freight.
Speaker Change: For both segments are better than expected may more than offset a softer than expected April.
Speaker Change: Looking at our volume trends by service U S domestic volumes held up well throughout the quarter with growth accelerating in late April and May.
Speaker Change: Our nationwide coverage in our speed advantage are helping us win new profitable business, we saw 6% volume growth across our U S domestic parcel services.
Speaker Change: From an international perspective, our volume trends closely tracked global trade headlines.
Speaker Change: March performance was solid and in line with our expectation.
Speaker Change: Following the April 2nd tariff announcements customer concerns increased and as a result volume softened.
Speaker Change: In early May upon tariff implementation, China to U S volumes deteriorated sharply and remained weak throughout the rest of the quarter.
Speaker Change: Our international export revenue was flat, reflecting the tariff related impact on our Trans Pacific Trade Lane.
Speaker Change: I do want to take a moment to commend our clearance team at the Memphis hub for their success in navigating this environment and maintaining excellent service.
Speaker Change: This was an impressive feat given custom entries in may were double the January through April average.
Speaker Change: Within our freight segment shipments remained pressured at the year over year decline moderated sequentially with average daily shipments down 1% year over year in Q4.
Speaker Change: <unk> down 5% in Q3 and down 8% in Q2.
Speaker Change: In fact average daily shipments up eight 3% sequentially with our greatest Q4 over Q3 increase in fiscal year 'twenty one.
Speaker Change: As we prepare for the French spinoff, we are continuing to execute on our commercial strategy with an emphasis on improved service and pricing discipline and we continue to build out our dedicated sales force.
Speaker Change: The pricing environment continues to improve.
Speaker Change: At Federal Express total U S. Domestic package yield was up slightly with strength in our priority services offset by next shift in softer yields and deferred and ground economy.
Speaker Change: Maintaining pricing discipline remains a top priority.
Speaker Change: International export package yield declined 1%.
Speaker Change: Driven by lower international economy yields, partially offset by an 11% yield increase for international priority.
Speaker Change: Within global Air freight we are pleased to see higher revenue per pound. This is a direct result of our tricolor strategy, which is designed to increase network flexibility reduce costs and importantly support profitable growth in the international export freight market.
Speaker Change: Thanks for Tri color, we delivered 5% growth in international Airfreight revenue in Q4 with a high profit flow through.
Speaker Change: Fedex freight I remain encouraged by the continued increase in revenue per hundredweight up 1%.
Speaker Change: Signaling our continued commitment to revenue quality.
Speaker Change: Total revenue per shipment declined 1% due to lower fuel surcharge and lower weight per shipment.
Speaker Change: Looking ahead as global trade policies continue to evolve and companies are Joseph shipping pattern, we are well positioned to support our customers and adapt as needed.
Speaker Change: Our current expectation is for flat to 2% revenue growth in the first quarter.
Speaker Change: This range includes approximately $570 million of idiosyncratic revenue headwind from the expiration of the U S Postal service contract and recent trade disruption.
Speaker Change: Where we land in the range largely depends on how the U S domestic revenue at SEC evolve.
Speaker Change: The top end of the range assumes current favorable U S domestic trends in SEC continue through Q1.
Speaker Change: The lower end of our range assumes incremental pressure to U S domestic demand.
Speaker Change: Internationally, we expect revenue from China to U S Lane to remain pressured consistent with what we saw exiting Q4.
Speaker Change: At freight we forecast revenue to decline slightly year over year in the first quarter.
Speaker Change: Now a quick update on our commercial strategy, our focus is paying off translating to better customer experiences and financial outcomes.
Speaker Change: Our emphasis on BTB small and medium size businesses, Europe, and airfreight is a deliberate approach to capitalize on high margin market opportunities, while diversifying our revenue streams globally.
Speaker Change: We'll then be to be healthcare and automotive remain important verticals for us.
Speaker Change: We exited FY 'twenty five with $9 billion in healthcare related revenue, which drove growth in our U S priority volumes.
Speaker Change: In Q4, we became the first global integrator, two and achieve an important pharma related certification notice. This.
Speaker Change: This is for grant ground handling across our express hubs and ramps.
Speaker Change: This marks a significant milestone in our commitment to quality compliance and leadership in pharmaceutical logistics.
Speaker Change: It's the strength of Fedex is quality management system, and our ability to deliver end to end logistics services in compliance with the increasingly complex and highly regulated pharmaceutical industry.
Speaker Change: As we look to further penetrate the high margin health care segment I am confident this achievement will unlock even more opportunity for us.
Speaker Change: Within automotive, we recently created a distinct vertical with its own dedicated leadership team and we are off to a strong start.
Speaker Change: We were recently awarded GM supplier of the year award for the 21st year in a row.
Speaker Change: Our focus for fiscal year, 'twenty stacks will be growing within the $18 billion high margin segment of the North American automotive market.
Speaker Change: Sub sector focused on premium services that supports automotive supply chain.
Speaker Change: Additionally, small medium customers remains central to our commercial strategy.
Speaker Change: Fedex rewards our loyalty program is unique in the industry and has become an important gateway for small and medium sized business businesses.
Speaker Change: I'm, especially pleased with our revenue growth in the U S. As the rewards program enrollment increased 8% year over year.
Speaker Change: The rewards program creates a more seamless personalized customer experience and drives customer loyalty.
Speaker Change: I want to again, thank our team for continuing to execute on our commercial strategies. There are efforts are improving the customer experience, helping our customers navigate this period of volatility and positioning us well for sustainable growth that flows through to the bottom line and with that I'll turn it over to John.
John: Thank you Barry and Hello, everyone.
Speaker Change: First I'd like to share that the culture, an extraordinary business that Fred Smith created.
John: And conditionally drew me to Fedex.
John: I always greatly respected Fred from my earliest encounters with him in the industry and I am grateful and beyond privilege to have worked directly with him. These past two years.
Speaker Change: Now turning to the quarter.
Speaker Change: I'm very pleased with what we achieved in Q4.
Speaker Change: This includes the actions we've taken to increase stockholder value our discipline on Capex and the transformation we.
Speaker Change: Advanced all while navigating a very complex environment.
Speaker Change: Our Q4 results reflect our ability to flex our network onboard new revenue and manage costs.
Speaker Change: On a consolidated basis, we delivered $18 19, and adjusted earnings per share for FY 'twenty five achieving two consecutive years of earnings growth. Despite the prolonged freight industry softness to fewer operating days the exploration of the U S postal service contract and extraordinary weather.
Speaker Change: <unk> events.
Speaker Change: Federal Express also posted higher FY 'twenty five results year over year, despite significant headwinds with adjusted operating income of $151 million.
Speaker Change: On $641 million in revenue growth.
Speaker Change: <unk> strong flow through to the bottom line demonstrates the powerful leverage inherent in our business.
Speaker Change: Reality that will become even more apparent when we see a recovery in the industrial economy.
Speaker Change: While consolidated adjusted operating income declined to $121 million. This was due to Fedex freight results, which continued to be challenged due to the prolonged weakness in the industrial economy.
Speaker Change: Taking a closer look at consolidated Q4 performance on a year over year basis, we delivered an 8% increase in adjusted operating income on a 1% increase in revenue.
Speaker Change: These results reflect our ability to grow revenue profitably as well as our ongoing commitment to managing our cost structure.
Speaker Change: Our revenue performance includes recent healthcare wins, which are part of our strategy to profitably grow and B to b.
Speaker Change: Adjusted operating income increased by $147 million and adjusted operating margin expanded by 60 basis points. We achieved this result, despite a $165 million headwind from one fewer operating days.
Speaker Change: Third $20 million headwind from the U S postal service contract exploration and pressures from the global trade policy changes.
Speaker Change: At SEC adjusted operating income increased by $136 million and adjusted operating margin expanded 70 basis points.
Speaker Change: This was driven by continued drive savings increased U S and international export volume and base yield growth.
Speaker Change: These drivers were partially offset by operating expense inflation and the headwinds I mentioned earlier.
Speaker Change: Regarding our Asia International export exposure, the bilateral China to U S Lane represents around two 5% of consolidated revenue.
Speaker Change: And is our most profitable Intercontinental Lane.
Speaker Change: Due to escalating trade barriers in the quarter, we experienced a material headwind on our Asia to U S Lane, largely driven by China.
Speaker Change: Notably this was not fully factored into our prior March outlook as certain tariffs were not yet announced and implemented until after our last earnings release.
Speaker Change: At freight operating income fell by $30 million and operating margin declined 40 basis points.
Speaker Change: Freights operating income also reflects a $33 million gain on sale of a legacy facility.
Speaker Change: As anticipated our freight performance improved sequentially and our team maintained pricing discipline as base yields continued to be a tailwind to the quarter and the fiscal year.
Speaker Change: In addition to our segment results our fourth quarter results include a noncash impairment charge of $21 million related to our decision to permanently retire an additional 12 aircrafts Inc.
Speaker Change: Including 703, hundreds three MD elevens and $2 750 sevens as well as eight related engines.
Speaker Change: Over the last three years, we've removed a net 31 jet aircraft from our fleet, which is a 7% reduction versus FY 'twenty two.
Speaker Change: These actions are aligned with the company's fleet reduction and modernization strategy as we continue to improve global network efficiency and better align air network capacity with anticipated demand.
Speaker Change: Now moving on to capital allocation.
Speaker Change: I am extremely pleased that we both significantly reduced our capital intensity and returned $4 3 billion to stockholders in FY 'twenty five.
Speaker Change: This was well above our previous $3 8 billion commitment.
Speaker Change: During the fourth quarter, we Opportunistically purchased an additional $500 million in shares, bringing our total to $3 billion in share repurchases for the year.
Speaker Change: And we remain committed to returning capital to stockholders, we increased our dividend by 5% in FY 'twenty six making.
Speaker Change: Making this the fifth consecutive year with a dividend increase.
Speaker Change: We will also continue to repurchase shares and expect the combination of our fiscal 2026 share repurchases.
Speaker Change: And dividend payments to approximate adjusted free cash flow.
Speaker Change: We also significantly reduced our capex spending in FY 'twenty five by approximately $1 1 billion.
Speaker Change: For a total of $4 1 billion.
Speaker Change: Compared to $5 $2 billion in FY 'twenty four.
Speaker Change: This marks our lowest capital spending in over 10 years.
Speaker Change: Additionally, our capex as a percentage of revenue was four 6%.
Speaker Change: The lowest level since Fedex Corp was established in fiscal year 98.
Speaker Change: We're currently planning for FY 'twenty, six capex to be approximately $4 5 billion.
Speaker Change: Which $700 million relates to network <unk> investments.
Speaker Change: And we plan to further reduce aircraft capex to approximately $1 billion this fiscal year.
Speaker Change: Level, we plan to maintain for the next several years.
Speaker Change: I'm also very proud that our adjusted free cash flow conversion from net income was extremely strong at nearly 90%.
Speaker Change: Representing a step change versus prior years, driven by our lower capital intensity.
Speaker Change: On this point approximately 85% of our FY 'twenty five capex was related to modernization of our aircraft and vehicle fleets as well as optimization and automation of our network. We continue to prioritize investments that support increasing efficiency and reducing our cost to serve as opposed to capacity.
Speaker Change: Expansion.
Speaker Change: This capital spending approach signals an inflection in.
Speaker Change: In the life of our business as we can now further reap the benefits of our global network and seek to increase stockholder returns and improve ROIC in the years ahead.
Speaker Change: And we are translating our adjusted free cash flow at parity into stockholder returns.
Speaker Change: With respect to pension contributions.
Speaker Change: FY 'twenty six we're planning for up to $600 million of voluntary pension contributions to our U S qualified plans, which are 103% funded as of the end of FY 'twenty five.
Speaker Change: And finally, we have $1 $3 billion of debt maturing in FY 'twenty six would we expect to pay off or refinance.
Speaker Change: Yeah.
Speaker Change: Now I'd like to walk you through our expectations for Q1.
Speaker Change: As we've talked about the macroeconomic environment remains uncertain.
Speaker Change: Our outlook is therefore based on current tariff rates recent trends, we're seeing as well as that which we're hearing from our customers.
Speaker Change: As Bruce shared we're currently planning for consolidated Q1 revenue to be in the range of flat to up 2%.
Speaker Change: Including $170 million adjusted operating income headwind from international export due to global trade policy impacts.
Speaker Change: This translates to a Q1 adjusted EPS range of $3 40 to $4, which includes approximately $200 million and transformation benefits.
Speaker Change: We also anticipate our quarterly effective tax rate to be approximately 25%.
Speaker Change: At $3 and <unk> 70 of adjusted EPS, the midpoint of our range, we anticipate a 1% increase in federal Express revenue with adjusted operating margin up modestly.
Speaker Change: Also at the midpoint, we anticipate Fedex freight revenue to be down slightly with a modest decline in operating margin.
Speaker Change: Now turning to our FY 2006, Q1 operating income bridge, which shows the year over year elements embedded in our outlook.
Speaker Change: This bridge reflects adjusted operating income of $1 billion to $5 billion, which is equivalent to $3 70 of adjusted EPS.
Speaker Change: For revenue net of costs, we expect $130 million tailwind.
Speaker Change: <unk>, our assumptions of operating expense inflation and revenue growth, mostly U S domestic.
Speaker Change: We're forecasting $170 million and headwinds from international export as I mentioned, driven by the global trade policy impacts primarily on our Trans Pacific Lane.
Speaker Change: Lastly, we anticipate $120 million and headwinds from the expiration of the U S Postal service contract.
Speaker Change: Partially offsetting these headwinds is $200 million of benefit from our transformation initiatives.
Speaker Change: Now turning to some important considerations for FY 'twenty six.
Speaker Change: We expect around $1 billion in incremental year over year benefit from our transformation related efforts, which include structural cost reduction benefits from drive and network <unk>.
Speaker Change: We anticipate a moderate ramp of these savings throughout the fiscal year.
Speaker Change: In addition, U S postal service contract exploration will be a near term headwind for modeling purposes I want to note that this significant revenue and operating income headwind is limited to the first four months of FY 'twenty six.
Speaker Change: Likely to skew typical seasonality.
Speaker Change: As a reminder, small upticks and <unk> revenues can result in significant incremental flow through.
Speaker Change: So if we see a recovery in the industrial economy, we are well positioned to see strong leverage to operating income.
Speaker Change: In addition to our Q1 outlook, we remain committed to being transparent and resuming our full year outlook for adjusted EPS, the effective tax rate and capital returns as visibility improves.
Speaker Change: Now that we're into a new fiscal year, we're very excited about the significant value creation opportunities ahead for both Fedex Corporation, and the future Standalone Fedex freight company.
Speaker Change: In that regard we plan to host a Fedex Corporation Investor day in Memphis in early calendar 2026, where we will share more details on our long term strategy.
Speaker Change: This will include a detailed update on our strategic initiatives, such as network <unk>, which represents a $2 billion savings opportunity from our physical network integration and associated one Fedex savings by the end of fiscal 2027.
Speaker Change: Additionally, we will continue to progress our freight separation plans.
Speaker Change: To spinoff rate in June of 2026.
Speaker Change: We also look forward to hosting our Fedex freight Investor Day next spring prior to the spin off.
Speaker Change: In closing, while FY 'twenty six presents unique challenges and uncertainties. What remains unchanged is our commitment to driving stockholder returns and building a more profitable Fedex.
Speaker Change: Our transformation initiatives capacity reductions and successful commercial strategies are helping us navigate the current environment and.
Speaker Change: And position us extremely well for when demand recovers.
Speaker Change: I am confident in the value creation opportunity that remains in front of us and with that operator, let's please open it up for questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: Please limit yourself to one question.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question is from Daniel <unk> with Stephens. Please go ahead.
Daniel: Yeah, Hey, good evening, everybody. Thanks for taking my questions.
Speaker Change: Yes.
Speaker Change: Ross I guess I want to start on the network to other savings and maybe John you can help chime in here too, but Ross you mentioned ramping the pace of them through the fourth quarter and kind of into the first quarter. I guess I think John said $200 million of driving network <unk> in the first quarter, but can you talk about the shape of how you see that $1 billion developing.
Speaker Change: Through this year, just given the pace of the rollout and then John just digging into that $200 million. It looks like you've got almost $700 million to drive savings in the fourth quarter. Thank you for your just flatline that it should be a few hundred million dollars of benefit in the first quarter. So are there any offsets.
Speaker Change: Why because it does drive savings aren't larger in the first half of the year that'd be great. Thanks.
Speaker Change: So thank you Daniel I'll take that and with regard I'll start kind of in reverse order make sure I capture all your questions.
Speaker Change: Yes with regard to the the $1 billion, we're anticipating $200 million of that in the first quarter as we stated and as I said in my remarks, we see a ramping up of that through the year and that will include not only drive but network <unk> savings and we've been we've been clear that with regard to final.
Speaker Change: <unk> returns on network to that Oh, we're really not going to see the material impact of that until the end of fiscal year 2027.
Speaker Change: So with regard to your comment on.
Speaker Change: The Q4 results you are right, we achieved are north of $600 million almost $650 million roughly of drive benefit.
Speaker Change: Which we committed to at the beginning of the year, we ramped up sequentially through the year and achieved our $4 billion for the two years and our two two for FY 'twenty five.
Speaker Change: So drive is going to be something we're going to continue to focus on.
Speaker Change: We're going to continue to feed the pipeline.
Speaker Change: It runs across and as part of our culture here at as a way of doing business for us and the way I've described to some it's really a journey not a destination. So we're going to keep feeding it but.
Speaker Change: Our current outlook.
Speaker Change: The next question is from Brian <unk> with Jpmorgan. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Hey, good evening, thanks for taking my questions.
Speaker Change: Brian just wanted to talk about.
Speaker Change: Dynamic.
Speaker Change: Pricing in your commentary I think in the past you said.
Speaker Change: Our position is still pretty challenging at times, increasing but it sounded like the pricing environment is actually improving so if you can give us a sense as to what changed and then also how are you.
Speaker Change: We're trying to balance the extra capacity in the network with some of these and increasing utilization.
Speaker Change: With some of these pricing initiatives like fuel surcharges and other.
Speaker Change: Theyre only dimensional hard handle that we're seeing in the market.
Speaker Change: Thank you.
Speaker Change: Thanks, Brian as I did mention in my prepared remarks, we do see improvement in the pricing environment, which is encouraging I do want to note that this is compounded with our team.
Speaker Change: Focus on revenue quality and I could not be more proud of the team's execution as you saw over the last quarter. They pulled multiple pricing lever as we continue to work on our large package strategy, because we get a higher price relative to market. Because this is a very differentiated capability. We've got great coverage in rural we're continuing.
Speaker Change: To lock in opportunities to monetize that and get paid for the differentiated value and then of course, we did make a significant change in our fuel surcharge of 2%. So we are pleased with the market, but we're equally pleased with the team's ability to execute.
Speaker Change: A great proof point of this is in Q4, when you look at the domestic yield for the quarter you will see that the overall domestic parcel yield is still pressured but what you can't see is that for home delivery and ground commercial we had our best year over year yield improvement for those two really important products in <unk>.
Speaker Change: Q4, so again, just a great proof point of how well the team is executing thank you for the question.
Chris Wetherbee: The next question is from Chris Wetherbee with Wells Fargo. Please go ahead.
Chris Wetherbee: Yeah, Hey, Thanks, Good evening guys maybe.
Speaker Change: Maybe I could ask about the guidance and thinking a little bit about what shows up in fiscal <unk> that may not as we go through the rest of the year. So the $120 million from the post office I think that's easy to understand the $170 million on the international side I guess can you maybe help us understand.
Speaker Change: I'd break it down a little bit between maybe de minimis or what we're seeing and so China to the U S or relative to maybe other countries to the U S and then.
Speaker Change: That play out what do we need to see to sort of change that dynamic into the next several quarters of the year in other words does it stick around for a while is there a certain event that youre looking for to give you. Some more comfort that that's maybe not going to be around for the rest of the year.
Speaker Change: I think I'll take that one so.
Speaker Change: From a obviously the trade environment is the primary reason that we are focused on Q1 versus a range for the entire year, we just simply cannot predict.
Speaker Change: How that's going to play out we built the range as John talked about.
Speaker Change: Just on the current trade and tariff environment, what we do anticipate is that from a year over year perspective, we will have pressure in the Trans Pacific Lane and so when we talked about the headwind on tariffs. The vast majority of that is impact from China to the U S and within that the vast majority is the impact.
Speaker Change: A de Minimis.
Speaker Change: And I think what I'd add to that Gary is.
Speaker Change: For other points in the globe outside of China. There is still some trade negotiations going on there as well, which we don't yet know the outcome upside to that additional color. Yeah. Let me just say this but I think over the next 30 to 60 days, they're going to the trade environment will change and so we will see.
Speaker Change: As that evolves.
Speaker Change: And it is very dynamic and at that point, we'd be able to be more prescriptive. Thank you.
Speaker Change: The next question is from retail Jorge with Deutsche Bank. Please go ahead.
Speaker Change: Hey, everyone. Thanks, and thanks for the question. So I know any pressure in a lot of challenges and uncertainties out there.
Speaker Change: Hence <unk>.
Speaker Change: But just as we think about the cadence of the year in terms of some of the discrete tailings and headlines related to cost savings and the like perhaps you can help us a little bit more. So recently Q1 is that presenting something like 20%, possibly Aps with.
Speaker Change: John You mentioned some of those things in a branch.
Speaker Change: The USPS will be a headwind early part of the year that goes away a lot of influence normal seasonality. So should we assume Q1 will have a lower rate than usual, especially as these trucks up hospitals.
Speaker Change: <unk>.
Speaker Change: Yeah. Thanks, Rich, Yeah, I think Thats, a fair assumption there when you look at the particular headwind with regard to the postal service contract.
Speaker Change: And that we're going to lap in subsequent quarters. So.
Speaker Change: As you said, we're only providing first quarter outlook at this time.
Speaker Change: And that U S postal service headwind will be a factor.
Speaker Change: As a reminder, we will lap that and.
Speaker Change: And we can as we continue to build.
Speaker Change: Build out on our expected $1 billion in transformation benefit throughout FY 'twenty six that could have an impact depending what happens on the revenue environment, particularly in U S. Domestic.
Speaker Change: The next question is from Jason Seidl with TD Cowen. Please go ahead.
Jason Seidl: Thank you operator, and condolences to the Smith family Transportation sector definitely lost a giant.
Jason Seidl: Wanted to just parse out between sort of <unk> in consumer it sounded like a lot of the pressure was on the <unk> side still maybe you could talk a little bit about the consumer and I think you mentioned may.
Speaker Change: May was better than expected what are you guys seeing so far month to date in June.
Speaker Change: Hey, Jason Thank you for your comments and the local pass onto the family.
Speaker Change: Great.
Speaker Change: Thank you for the question so from a beta perspective, yes, you're absolutely right we have not seen.
Speaker Change: A marked improvement in the industrial economy, and that's certainly pressuring both our Fedex ground commercial but also our base at express and certainly the Fedex freight division.
Speaker Change: So we have not seen improvement there obviously, when we see improvement we're ready to capture that from a consumer perspective. When we saw the May increase obviously spent a lot of time looking at the data. There is no one indication that we can point to that says that there was a consumer pull forward, but I can tell you is onboard.
Speaker Change: <unk> within our own pipeline was stronger in May and that was the largest driver whether or not there is consumer poll forward is TBD, which is why we gave you the range that we did from a revenue perspective.
Speaker Change: Let me just make one more point here I think are on Q4.
Speaker Change: What is the operating leverage that we have.
Speaker Change: With the volume increase is primarily driven by a b to C. So obviously, that's the hard work that we've done over the last three years, which gives us that operating leverage.
Speaker Change: And.
Speaker Change: When the B to B starts to grow again, there is significant opportunity here.
Speaker Change: The next question is from Jon Chapell with Evercore ISI. Please go ahead.
Jon Chapell: Thank you good afternoon, and our condolences as well as the Smith family in the Fedex family.
Speaker Change: Constructing with Roger's comments about cutting age of the U S capacity by 35% in the first week of May and exiting may down.
Speaker Change: Down 20% as we think about this tariff impact how much of that 170 is at least as it relates to the first quarter is strictly revenue and how much of it is cost that could be fleeting so to speak.
Speaker Change: Around the flexibility of the network.
Speaker Change: I will say this much I think the first of all because of the implementation of tricolor. Our network has become incredibly more flexible what we've accomplished in may would not have been possible without the implementation of Tri color I will leave it to John to parse the revenue and the cost.
Raj Subramaniam: Great question, Yes, Thanks Raj.
Raj Subramaniam: It's a fluid situation in that.
Speaker Change: In areas, where we may be contracting in terms of flights and so forth, we're redirecting that to where the demand is going to so it's not a straight take out of the cost and we're going to continue.
Speaker Change: Two.
Speaker Change: Adjust to the demand flows so we're going to be watching that closely.
Speaker Change: We're going to be watching our our assets closely.
Speaker Change: So I think it's fair to say I'm, not going to parse out the $170 million in topline and bottom line, but I will say, we're watching it closely and it's a.
Speaker Change: Appropriate estimate of what we're seeing right now.
Speaker Change: The next question is from Conor Cunningham with Melius Research. Please go ahead.
Conor Cunningham: Hi, everyone. Thank you just going back to the network to that you mentioned I think $2 5 million.
Speaker Change: Packages that are going through the new network now or by the end of June I should say can you just talk about the margin contribution of those are they are they coming in as you would expect.
Speaker Change: You've you've downplayed the.
Speaker Change: All of those being more of an FY 'twenty seven thing I'm just trying to understand why there is that lag lagging gap is there like a lag period between.
Speaker Change: Those needing to go up to where you would think from a margin contribution standpoint. Thank you.
Speaker Change: Hi color. Thank you for the question so from a network to Dot O I cannot emphasize enough. How pleased we are with Scott ran the execution that this team has demonstrated when we looked at the original case from a PND perspective. The majority of the savings are in the pickup and delivery of reduction and we are hitting those targets over a very.
Speaker Change: With that as we think about when we want to flow through our expected the flow through from network <unk>. It is important that it is going to follow because when we go into a market we have cost to implement the change in service and to make sure that we've got the right contingency. So we have no revenue breakage. So that's why you're seeing a lag we are on track as we.
Speaker Change: <unk> talked about craft by 27, and the $2 billion. So we feel really good about this program.
Speaker Change: Yeah.
Jordan: The next question is from Jordan <unk> with Goldman Sachs. Please go ahead.
Speaker Change: Yes, hi.
Speaker Change: My condolences to the Smith family as well.
Speaker Change: Visionary.
Speaker Change: So sort of a secular question.
Speaker Change: And then can you perhaps some of your perspective on the change in global trade patterns.
Speaker Change: Due to tariffs I know, it's early but specifically.
Speaker Change: Specifically for less than truckload potential ramifications to domestic manufacturing and then some more of a global perspective. Indeed do you expect to see an emergence of China, plus one and even a plus two strategy from a logistics perspective. Thanks.
Speaker Change: Thank you Jordan I appreciate your condolences as well.
Speaker Change: The patterns are changing as we speak and <unk>.
Speaker Change: Clearly.
Speaker Change: We are seeing growth from southeast Asia for example, Vietnam.
Speaker Change: We launched this direct flight or redirect to the slide <unk>, Singapore directly to the United States, which is a significant value proposition improvement for that market.
Speaker Change: We're seeing we're looking at Asia to Europe as an opportunity.
Speaker Change: I was in Miami, Our headquarters are Latin America inbound markets are growing so in the.
Speaker Change: <unk>.
Speaker Change: This pattern in markets like India are growing substantially as well so the patterns are changing as we speak.
Speaker Change: But the good news for Fedex is that we have built out. This global network. This is where we get to flex our scale of the network that we built out because we don't have to do much different because we are already there in these markets we have to be careful in making sure that we know that the capacity is.
Speaker Change: Right.
Speaker Change: And markets.
Speaker Change: We can move faster and the whole manufacturing can move when we get the feedback of what's happening on the ground from a bottom up as you see we have a referendum on global supply chains every single day.
Speaker Change: So this is something that that we are working with the second part of it is.
Speaker Change: The fact that over the last many many years for every country every other country or every commodity.
Speaker Change: We have the data and normally do we have the data we have engineered and created the digital twin. So then we are able to apply the most modern technology to be able to create a platform solutions for our customers in this very complex environment, and so whether it's in quarters, where theres explorers, whether those brokers, but those regulators.
Speaker Change: So yes complexity is increasing the environment is changing but here's where we get to flex our scope.
Speaker Change: <unk>.
Brian: Brian I don't have very much that I think you've covered that comprehensively I think post COVID-19. We already saw a focus on regionalized supply chain I think there was that impetus to diversify and I think that theres going to be a continuation there too.
Brian: Really pleased with the commercial team and their execution and developing market India comes to mind right now we have a relatively small revenue base.
Brian: But they are really doing well from a profitable growth perspective, we can see the same thing we've got great momentum from Asia into Latin America. So I think the team is actually executing really well I think the other thing that's critically important as Joe and the team have put in an extraordinary extraordinary program in place that Incent the Chinese sales team.
Speaker Change: <unk> to notify their counterparts around the world So to Roger's point from a bottoms up when they make yourself, Helen China and they are our customer there that is diversifying we know we are connected and so we have the right conversation with their counterpart in Mexico, or Vietnam, or Malaysia, or wherever else. They are moving on.
Brian: Thinking about shifting their demand. So I think we're really well prepared for any change in the market.
Speaker Change: The next question is from Bascom majors with Susquehanna. Please go ahead.
Speaker Change: Yes, Thanks for taking my question, John when you walk through the cash flow I know, we'll see this when we get the 10-K later, but how much capex is in the freight segment for last year and how is that anticipated to trend in the budget for this year in the $4 5 billion that you talked about.
Speaker Change: Yeah.
Speaker Change: Yes, Bascom I'm going to I may have to get back to you on that one I don't have that number right at my fingertips and if you'd just give me a minute I'll come back to revisit that that answer.
Speaker Change: The next question is from Scott Group with Wolfe Research. Please go ahead.
Speaker Change: And before I do Scott Hey, basketball.
Speaker Change: Do have that number it's $437 million, so I apologize for that flight delays. Thank you.
Speaker Change: Hey, Scott.
Speaker Change: Alright, Thanks, and I'll Echo condolences as well to Fred's family in the Fedex team John I guess my questions are for you is can you clarify how much of the $1 billion. This year is drive versus network 2.0, and then.
Speaker Change: I guess.
Speaker Change: I understand we don't have a full year guide, but what's your degree of confidence that we will see.
Speaker Change: Full year earnings growth this year I'm not asking for a range, but just directionally do you think we are set up to grow earnings this year.
Speaker Change: So thanks, Scott So on your first question of the $1 billion, we're not really breaking out the <unk>.
Speaker Change: Much of that is driving network to <unk>.
Speaker Change: I expect we're going to have puts and takes on both fronts.
Speaker Change: What we are committed to is the $1 billion and when you look at our prior goals, we put it out there and we achieve them. So I'm looking forward to achieving the $1 billion and as I said before keeping to feed the pipeline.
Speaker Change: So with regard to our guidance.
Speaker Change: Yes, I think it's dependent on where the demand environment goes to we're going to be focusing on those things within our control. We've got a handle on those things within our control and depending on what happens in the macro environment will depend on where we fall within the range. So.
Speaker Change: We put a range out there for a reason and we believe if there are favorable factors, we're going to be on the top end of the range and if if we're under pressure.
Speaker Change: It will be on the lower end of the range. So I think a good way to think about is it zero flat revenue. We're at the lower end of the range of $3 40 at 1% it will be at the $370 million at the 2% will be at about $4. So.
Speaker Change: Obviously, we're going to shoot for that $4 and then some.
Speaker Change: And Scott let me just.
Speaker Change: Just talk a little bit more broadly I think if you look back at the last three years, we have reduced our total costs in <unk>.
Speaker Change: Absolute terms by 4 billion plus dollars.
Speaker Change: And this is in a period of inflation. So that provides us a lot of leverage and we can see the opportunities now you know in your own words, the jostled crocodiles bulk potentially open I think we have the even would be to see volume increasing we are seeing now significant operating leverage.
Speaker Change: And at some point the industrial economy will turn.
Speaker Change: So we have opportunities on both sides on one on the revenue side.
Speaker Change: You know, we will have to deal with an uncertain and dynamic economy, but.
Speaker Change: And then secondly, the operating leverage we have created because of our cost structure will help us going forward.
Speaker Change: The next question.
Brandon: <unk> is from Brandon <unk> with Barclays. Please go ahead.
Speaker Change: Hey, good afternoon, everyone and thanks for taking my question and obviously lost a great visionary and a patriot over the weekend. So can dawson to friends families friends and colleagues, but Raj.
Speaker Change: I think over the years.
Speaker Change: Now as we get spreads insight into global policies, especially on trade. We know over the years. He was a big proponent of free trade I guess can you give us some insight into his.
Speaker Change: Past guidance, maybe leasing guidance on how to navigate higher U S carriers that maybe are here to stay and how do you navigate the Fedex network in that scenario I really appreciate it.
Speaker Change: Thank you, Brian and we are all laughing about Joe Hello, how in the World I'm going to answer that question, but first of all thank you for your condolences.
Speaker Change: Yes, Fred was say absolutely cydnus and this on the side of a free trade, but as you're constantly reminding me that we don't make policy.
Speaker Change: And we get we get to implement policy, sometimes and that's what we're doing and I think the point that I would make to you is.
Speaker Change: It's very very difficult to predict what is going to happen over the next 30 to 60 days or even further and it's a dynamic environment. So we'll just have to live with that but what I would say is the point I stressed before the scale of Fedex comes into play in these kind of situations.
Speaker Change: Both on the physical side and the digital side as the complexity and the friction increases and the trade flow patterns change.
Speaker Change: We have the advantage from perspective that we have the scale to execute for our customers. So that's what we'll focus on and I'll stay away from the prediction game right now.
Speaker Change: And the final question today comes from Tom <unk> with UBS. Please go ahead.
Tom: Yes, good afternoon and look.
Speaker Change: Look at my condolences as well I know, it's gotta be painful the unexpected loss of your founder so condolences also to the Fedex family.
Speaker Change: The question I have.
Speaker Change: Have a bit of difficulty kind of translating to get the information you gave us on the network to point, though in terms of like is it just is it tracking or.
Speaker Change: I think in terms of terminal closures, maybe as being a better read as opposed to terminal conversion just a better read on cost savings. So.
Speaker Change: I know youre going to give us some updates in the future, but just any thoughts do you feel like Youre kind of ahead of the game on how thats going and.
Speaker Change: Or just how would you how would you think about it in terms of how it's progressing versus the program that you've had kind of had the same targets out there for a while and.
Speaker Change: And are there any components within that just like instead.
Speaker Change: Instead of terminals that are up and running and to point out how many terminals have actually been.
Speaker Change: <unk> actually been shut down at this point thank you.
John: Thanks, Thanks, Tom It's John I think the best way to describe it is that we're on track.
Speaker Change: This was a long game exercise an initiative and one of the things that is Paramount is that we.
Speaker Change: As <unk> mentioned before preserve our customer service and not only maintain but enhance our service we're seeing good progress on both the reliability side as well as the financial side for those locations. We have transitioned we're seeing a 10% improvement on our <unk>.
Speaker Change: So we're learning along the way too and we're adapting along the way. So I think it's fair to say we are on track.
Speaker Change: Put our targets out there in terms of the two $2 billion with network to that end and as part of one Fedex.
Speaker Change: As is.
Speaker Change: Going hand in hand, and we look forward to updating you on but I'd say it's on track.
Speaker Change: Thank you Tom again, I think I would just say first of all I'm very pleased with how we're progressing here.
Speaker Change: At the end of FY 'twenty five we have closed 100 stations and integrated 290 stations under the network good auto model.
Speaker Change: And we expect to by the end of this program.
Speaker Change: Expect to remove roughly 30% of our.
Speaker Change: Our surface facilities. So I was just out there and in the West coast.
Speaker Change: <unk> and implemented the Brookfield auto I was so delighted to see how well that they have done the morale of the team and how the team is working together. So yes. We're at this is.
Speaker Change: This is a journey for us, but so far so good Tom Thank you.
Raj Subramanias: This concludes our question and answer session I would like to turn the conference back over to Raj Subramaniam for any closing remarks.
Raj Subramaniam: Well in closing.
Raj Subramaniam: I would like to extend a sincere. Thank you for the outpouring of support received as Shimon Fred's laws, the words of support anecdotes thoughts and prayers.
Raj Subramanias: And over the last 72 hours are a testament to the life and legacy he leaves behind.
Raj Subramanias: I will end with a story that embodies hu Fred was as a person and what he stood for.
Raj Subramanias: As the family gathered over the weekend his sudden kind of noticed and engraving on tobacco Fred's watch.
Raj Subramanias: The same watch the war for many many years as cheap as he shook thousands of hands from heads of state.
Raj Subramanias: And business leaders to military veterans and countless Fedex team member.
Raj Subramanias: And then engraved on the back of this well warm.
Raj Subramanias: Assuming time pace.
Raj Subramanias: Is the phrase waste.
Raj Subramanias: Waste.
Raj Subramanias: A moment.
Raj Subramanias: Let me say that again.
Raj Subramanias: Waste.
Raj Subramanias: Not a moment.
Raj Subramanias: We will carry that sentiment with us as we all are fred's memory.
Raj Subramanias: And lead Fedex through the next chapter Thank you very much.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Raj Subramanias: [music].
Raj Subramanias: Yeah.