FedEx Corp Q4 2025 Earnings Call Transcript

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

Question: Daniel Imbro - Stephens Inc - Analyst : Hey. Good evening, everybody. Thanks for taking our questions. Raj, I guess I want to start on the network too savings. And maybe John, you can help chime in here, too. But Raj, you mentioned ramping the pace of them through the fourth quarter and into the first quarter. I guess, I think John said $200 million of DRIVE and Network 2.0 in the first quarter, but can you talk about the shape of how you see that $1 billion developing through this year just given the pace of the rollout. And then, John, just digging into that $200 million, it looks like you got almost $700 million of DRIVE savings in the fourth quarter. Can you just flatline that, it should be a few hundred million of benefit in the first quarter. So are there any offsets as to why those DRIVE savings are not larger in the first half of the year, that would be great. Thanks.

Question: Brian Ossenbeck - JPMorgan - Analyst : Thank you for taking my questions. Brie, I just wanted to talk about the competitive dynamic in pricing in your commentary. Maybe I think in the past, you said competition is still pretty challenging and at times increasing, but it sounded like the pricing environment is actually improving. So maybe you can give us a sense as to what changed? And then also how you're trying to balance the extra capacity in network with some of the improving utilization with some of these pricing initiatives like tool surcharges and other over-dimensional hard to handle that we're seeing in the market. Thank you.

Question: Chris Wetherbee - Wells Fargo - Analyst : Yes. Hey. Thanks. Good evening, guys. Maybe I could ask about the guidance and thinking a little bit about what shows up in fiscal 1Q 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 -- break it down a little bit between maybe de minimis or what we're seeing and so China to the US or relative to maybe other countries to the US. And then where does that play out? What do we need to see to 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 you're looking for to give you some more comfort that, that's maybe not going to be around for the rest of the year?

Question: Richa Harnain - Deutsche Bank - Analyst : Okay. Thanks for the question. So I know -- and I appreciate a lot of challenges and uncertainties out there, as you all said, hence no full year guide. But just as we think about the cadence of the year in terms of some of the discrete tailwinds and headwinds related to cost savings and the like. Perhaps you can help us a little bit more. So recently, Q1 has represented something like 20% of fiscal year EPS results. John, you mentioned some of those things in the bridge like the USPS will be a headwind early part of the year that goes away and that will influence normal seasonality. So should we assume Q1 will have a lower weight than usual, especially as the structural cost savings ramp up through the year?

Question: Jason Seidl - TD Cowen - Analyst : Thank you, operator, and condolences to the Smith family, the transportation sector definitely lost a giant. I wanted to just parse out between B2B and consumer. It sounded like a lot of the pressure was on the B2B side, still maybe you could talk a little bit about the consumer. And I think you

Question: Jonathan Chappell - Evercore ISI - Analyst : Good afternoon and our condolences as well as the Smith family and the FedEx family. Struck me in to Raj's comments about cutting each the US capacity by 35% in the first week of May and exiting May down 20%. As we think about this tariff impact, how much of that $170 million 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, around the flexibility of your network.

Question: Conor Cunningham - Melius Research - Analyst : Hi, everyone. Thank you. Just going back to Network 2.0. You mentioned, I think, 2.5 million 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 coming in as you would expect? And you downplayed the potential of those being more of an FY27. I'm just trying to understand why there is that lagging gap. Is there like a lag period between those needing to go up to where you would -- thing from a margin contribution standpoint. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 24, 2025 / 9:00PM, FDX.N - Q4 2025 FedEx Corp Earnings Call

Question: Jordan Alliger - Goldman Sachs - Analyst : Yes. Hi and I offer my condolences to the Smith family as well, truly visionary. So a secular question. If you have perhaps some of your perspective on the change in global trade patterns due to tariffs, I know it's early, but specifically for less than truckload and potential ramifications to domestic manufacturing? And then from more of a global perspective, indeed, do you expect to see an emergence of a China Plus One and even a Plus Two strategy from a logistics perspective. Thanks.

Question: Bascome Majors - Susquehanna - Analyst : Yes. Thanks for taking my question. John, when you walked 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 and the $4.5 billion that you talked about?

Question: Scott Group - Wolfe Research - Analyst : Hi. Thanks. And I'll echo condolences as well to Fred's family and the FedEx team. John, I guess my questions are for you. Can you clarify how much of the $1 billion this year is DRIVE versus Network 2.0? And then I guess I understand we don't have a full year guide, but what's your degree of confidence that we'll see full year earnings growth this year? I'm not asking for a range, but just directionally, do you think we're set up to grow earnings this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 24, 2025 / 9:00PM, FDX.N - Q4 2025 FedEx Corp Earnings Call

Question: Brandon Oglenski - Barclays Capital - Analyst : Good afternoon, everyone, and thanks for taking the question. And obviously, America lost a great visionary and a Patriot over the weekend. So condolences, friends, family, friends, and colleagues. But Raj, I think over the years, what we we're going to now is we would get Fred's 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 past guidance and maybe recent guidance on how to navigate higher US barriers that maybe are here to stay, and how do you navigate the FedEx network in that scenario? I really appreciate it.

Question: Thomas Wadewitz - UBS Securities - Analyst : Yes. Good afternoon. Look, my condolences as well. I know it's got to be painful, the unexpected loss of your founder, so condolence is also to the FedEx family. The question I have, I have a bit of difficulty translating, I guess, the information you gave us on the Network 2.0 in terms of like is it just -- is it tracking? Or 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 I know you're going to give us some updates in the future, but just any thoughts, do you feel like you're ahead of the game on how that's going and -- or just how would you think about it in terms of how it's progressing versus the program that you've had had the same targets out there for a while? And are there any components within that, just like instead of terminals that are up and running on 2.0, how many terminals have actually been -- or stations have actually been shut down at this point. Thank you.