FedEx Corporation Q3 FY2026 earnings call

• Team FedEx delivered strong results with most profitable peak. • Aligned with four strategic priorities: growing in high margin verticals, transforming network, building data and technology advantage, delivering efficiency gains. • Network 2.0 rollout underway, about 35% of eligible volume through optimized facilities by end of month, on track for 65% by next peak, expecting $2 billion cumulative savings by end of 2027. • Collaborated with Dun & Bradstreet to launch retail momentum index. • Implemented autonomous robotic system for trailer unloading. • Plan to spin off FedEx Freight on June 1 remains on track.

Federal Express Corporation (FEC) grew revenue 10% and expanded adjusted operating margin by 50 basis points, marking sixth consecutive quarter of margin expansion, with adjusted operating income growing 18%. FedEx Freight revenue declined 5% pressured by lower shipments, but revenue per shipment and attainment of contractual price increases helped mitigate. FEC grew average daily U.S. domestic volume by 5%, international export volumes inflected positively for first time in fiscal year 26. FedEx Freight shipments declined 6% in line with challenging LTL industry trends.

• Raised FY26 adjusted earnings outlook to $19.30 to $20.10 for diluted share. • Expect 6 to 6.5% consolidated revenue growth for FY26, compared to prior 5 to 6% forecast, with 6 to 7.5% revenue growth in Q4. • FEC midpoint of full year range implies approximately 8% revenue growth year over year, expecting 8% FEC revenue growth in Q4. • FedEx Freight expected fiscal year 26 revenue to be down low single digits year over year, flat to down slightly in Q4 due to LTL industry demand weakness. • FY26 CapEx to be no more than $4.1 billion, down at least $400 million from previous forecast.

• Monitoring Middle East situation, with safety of team members top priority, implementing contingencies and operating in alignment with local authorities. • Impact of global trade policy changes, MD11 fleet grounding, and LTL industry trends on financial performance. • Potential impact of fuel price volatility on profitability, with fuel surcharges indexed but still a factor.

Q: Ari Rosa with Citigroup asked about impact of Iran conflict.

A: Raj said team managing network, Middle East relatively small part of revenue, net fuel impact expected muted for FEC in Q4.

Q: Stephanie Moore with Jefferies asked about LTL business investments.

A: Marshall said separation costs increased in Q3 and anticipated in Q4, related to building IT infrastructure and talent for spinoff.

Q: Risha Harney with Deutsche Bank asked about Q4 headwinds and FY27 EPS.

A: Raj mentioned improved forecasting, commercial strategies, and efficiency led to profitable peak, with year-over-year headwinds from variable comp, LTL business, and MD11s.

Q: Scott with Wolf Research asked about sustainability of volume and yield growth.

A: Bree said focused on B2B and B2C, taken profitable market share, with momentum expected to continue but noting lapping of healthcare customers in Q4.

Q: David Vernon with Bernstein asked about impact of tighter air freight market.

A: Tom said no material impact expected in Q4 due to conflict, adjusted pricing accordingly.

Q: Chris Weatherby with Wells Fargo asked about cost savings opportunities.

A: Raj said exceeding billion dollars of savings this year, continuing to find efficiencies through network 2.0 and other initiatives.

Q: Jonathan Chappell with Evercore ISI asked about FedEx Freight margin and revenue drivers.

A: Marshall and John Smith said broader LTL market, focus on improving customer experience, pricing, and sales team, with investor day to share more detail.

Q: Jason Seidel with TD Cowan asked about LTL sequential tailwinds.

A: John Smith said to tune in to investor day on April 8 for go-forward strategy detail.