FedEx Corp Q2 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brandon Oglenski - Barclays Services Corp - Analyst : Hey good evening, everyone. Thanks for taking the questions. John, you just covered a lot in guidance there, and I'm sure we get plenty of questions on it. But I guess, longer term, it looks like you guys are definitely capturing incremental volume share in your domestic US business, the package business that is and seeing quite a bit of pricing upside too. So I wondered if you can talk to some of the dynamics there on both B2C and B2B and maybe if there's more to come on yield gains? Thank you.

Question: Jonathan Chappell - Evercore Inc - Analyst : Thank you. Brie, I want to stick with that topic. The B2B over half the revenue growth in 2Q. Just wondering if there's any way to break down how much of that is completely new volume business? How much of that is related to kind of yield and some of the surcharges or initiatives you're putting in? And should we think about that as being kind of a similar magnitude of overall growth as you think about the guide for the back half of the year?

Question: Richa Harnain - Deutsche Bank AG - Analyst : So I wanted to ask about service, more specifically the cost of service. Recently, you shared plans regarding management's annual cash incentive and you added a service component to that, which speaks to the significance you place on service as you work through your Network 2.0 transformation. We would think that comes with additional costs. So how much do you estimate you're carrying today in terms of those additional costs? And what's worked in the outlook? And how should we think about those costs trickling off? I'm sure, for instance, Canada is being run much more efficiently now than when you started your integration efforts. So how long did it take for that to become fully efficient?

Question: Brian Ossenbeck - JPMorgan Chase & Co - Analyst : Hey, good evening. THanks for taking the question. Maybe first, John, just to clarify, the costs you're talking about, are those separate from the spin-off costs, which are included -- excluded rather from a EPS guide? And then just wanted to hear a little bit more about the process, getting them back up to speed, it seems like it will take a little while, but it also seems like there's an incremental step-up in terms of headwind into the third fiscal quarter. Is that more or less because of the peak season? And I think we're expecting that to tail off a little bit, but it seems like it's actually increasing. So additional thoughts around that would be helpful.

Question: Scott Group - Wolfe Research LLC - Analyst : Hey, guys. John, I just want to follow up on that $600 million headwind you talked about in the back half of the year. I think you gave -- there's three pieces to it. Any way you can sort of break down that $600 million into the three buckets you laid out and maybe how much LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 18, 2025 / 10:30PM, FDX.N - Q2 2026 FedEx Corp Earnings Call of that is in Q3? And then maybe just along with that, like, I know you said earnings would be lower in Q3, but any sort of magnitude, I don't know, maybe the way to think about it, do you think earnings are flat, higher, lower year-over-year? Maybe that will be helpful if you could give a little bit more color.

Question: Jordan Alliger - Goldman Sachs Group Inc - Analyst : Just a question. The bridge to the midpoint is very helpful. I'm just sort of curious, though, the $19 are at the high end, is there a way you could frame up what would push it? Is that mostly tied to volumes looking better, the LTL environment looking better, more acceleration in B2B? Like, how do we think about framing to the north of the midpoint?

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : Thanks for taking my question. The domestic parcel growth rates have been really solid for several quarters in a row now. And as we get the indication from the guidance is that you expect that to continue. As we get further in the next year and UPS potentially gets some competitive advantages back with relationship with the Postal Service and potentially maybe some contractual competition three years past the new Teamsters deal and some of the share shift that happened there, do you think that growth is something that we can maintain at a high level into fiscal '27? Or could those potentially be headwinds that we should consider tapering the rate?

Question: Ken Hoexter - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good afternoon. Just on the simplify that freight, John, I guess you've mentioned it a few times, but the $300 million impact, if you pull out the $100 million in ongoing costs, is that the left over $200 million? Is that due to weakening demand. And I'm wondering what your view is of the competitive environment there. And then the $152 million in spin costs, is there anything you can maybe detail or break out what's going into that? Is that just continued? Is that ongoing cost? I just want to understand what's onetime, what's -- if any, and what is ongoing.

Question: J. Bruce Chan - Stifel, Nicolaus & Company Inc - Analyst : So kudos to your network planning folks, certainly, plenty to keep them busy, including what might be in imminent Supreme Court ruling on the tariffs. I wondering if we see a decision against the administration, whether you view that as a tailwind to trade activity next calendar year, especially maybe in the context of your $1 billion headwind estimate. I know that's a big question, but you all are very (inaudible) into Washington. So any perspective there would be very helpful.

Question: Stephanie Moore - Jefferies LLC - Analyst : Thank you. I wanted to circle back on peak season. Maybe you could provide a little bit more color on what you've seen thus far. I know you said it's tracked in line, but I think there's been a lot of commentary at a high level that we've seen talking about [same rate] recovery and also some questions just around the strength of peak season. You also commented a little bit about maybe small business or B2B. So any additional color you can provide on peak season would be great. Thanks.

Question: Ariel Rosa - Citibank Cameroon SA (Douala Branch) - Analyst : Nice job on the quarter here. Good to see the progress. I'm curious in the slides, you mentioned that you have 24% of volume flowing through Network 2.0 automated facilities. I think I'm remembering that correctly. I just want to understand what does that mean in terms of the margin profile for the facilities or kind of the cost structure per package on those facilities versus legacy facilities? And how should we think about the time line or the pace for that to continue to ramp. And kind of going to Tom's question, does that just mean we're looking at kind of potentially structurally higher margins going forward?

Question: David Vernon - Sanford C Bernstein & Co LLC - Analyst : So John, coming back to the question on the network 2.0 stuff, right? I think you guys had mentioned before you were looking at 40% of the volume by the end of FY26 running in an integrated facility. I'm trying to sort of reconcile that with the idea that margins are just going to be up a little. I thought the idea was that when you get the integration done, you're going to be running at a higher level of productivity, and that would flow through to margin. But I think I heard you maybe say that the financial impact maybe wasn't as great. I'm just trying to kind of get my head around that.