FedEx Corporation · NYSE:FDX
FedEx — Non-Deal Roadshow (March 2024)
25 slides from FedEx's roadshow presentation, Mar 21, 2024
Slide 1: FedEx Corporation Investor Relations
FedEx Corporation Investor Relations March 21, 2024 1 Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this presentation may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements regardi
Slide 2: Unmatched Global Network / Broad Portfolio of Services
Unmatched Global Network Links More Than 99% of World’s GDP • Over 220 countries and territories, including every address in the U.S. • 727 aircraft and more than 210,000 motorized vehicles • More than 5,000 operating facilities; more than 650 airports served worldwide • Delivers ~15M shipments per
Slide 3: Bundle of Solutions
Bundle of Solutions % of Revenue • Our portfolio of solutions creates a strong value proposition FedEx Express • 96.7% of U.S. revenue comes from (FXE) 0.9% customers of two or more operating companies FXE+FXG FXE+FXF 17.1% All 0.1% • We manage service offerings as Opcos a portfolio for the benefit
Slide 4: One FedEx / Reaffirming midpoint while narrowing adjusted EPS outlook
… to the future: One FedEx One FedEx Facilitates execution of DRIVE & Network 2.0 Reduces cost to serve and improves capital efficiency Streamlined structure increases visibility One FedEx will be a leaner, more agile company 7 Reaffirming midpoint while narrowing adjusted EPS* outlook range Dec 202
Slide 5: Illustrative operating income bridge based on FY24 adjusted EPS outlook
Illustrative operating income bridge based on FY24 adjusted EPS* outlook $1.8B $6.3B $0.2B ($0.8B) $5.4B ($0.3B) FY23 adjusted Revenue, net International Variable comp DRIVE FY24E operating of cost export yield adjusted income* increases pressure operating income* *Non-GAAP financial measure; see ap
Slide 6: Building momentum with significant value potential
Building momentum with significant value potential To date, DRIVE Network 2.0 Implementation of all has identified represents programs will generate in cost savings in cost savings in FY27, with significant in FY25 in FY27 upside as programs scale One FedEx represents significant cost savings creati
Slide 7: Well-positioned to capture opportunity in a large and growing market
Well-positioned to capture opportunity in a large and growing market E-commerce remains the growth B2B higher-margin verticals demand engine of parcel volume top-tier service • ~90% of expected parcel industry growth • Target segments generate high margins comes from e-commerce* • Well-positioned to
Slide 8: Surface Network Initiatives to deliver $1.2B in cost savings in FY25
Surface Network Initiatives to deliver $1.2B in cost savings in FY25 Ground linehaul Ground dock Ground P&D Express U.S. operations operations operations surface operations $450M $300M $150M $300M Safety Improving outcomes 15 Network 2.0 - Interoperable network eliminates redundancy, generating $2B
Slide 9: Network 2.0 will provide structural cost reductions across surface operations
Network 2.0 will provide structural cost reductions across surface operations Pickup & delivery interoperability Facilities footprint consolidation Now 2.0 Now 2.0 P&D duplication One van, one ~70% of buildings Moving to a network neighborhood are within 20 miles design that results in deployment ta
Slide 10: Optimizing profitability across European networks
Global Air Network: Lowering cost to serve through structural improvements ~$700M Key cost-out drivers: in FY25 • Focusing flying on balanced lanes, consolidating for density and executing Global Partner Network as an adaptive capacity layer Fuel • Leveraging more efficient aircraft types and adopti
Slide 11: Europe: Making progress on identified opportunities
Europe: Making progress on identified opportunities ~$600M in FY25 Domestic • Restructuring the networks P&D • Improving route planning, sort processes, and work force management • Optimizing load plans Road • Segregating freight and parcel to improve load factors • Right-sizing fleet by removing, r
Slide 12: Realizing functional excellence across the enterprise
Realizing functional excellence across the enterprise Leaner, Tech-enabled Streamlined nimbler optimized functions leadership processes supporting operations Right “shape” of Tech-enabled processes Greater efficiency the enterprise driving execution efficiency through right-shoring transactional cap
Slide 13: Financial framework / Capital allocation priorities
Financial framework Potential tailwinds: • Normalized e-commerce growth • Improved Asia-Pacific trade flows Revenue Adj. operating • Europe stabilization margin* • Growth increases in key segments CapEx as a % of revenue of Sustained ROIC Potential headwinds: improvement • Timing of demand growth •
Slide 14: FedEx Business Trends
FedEx Business Trends Meeting E-Commerce Demands • Year-round, seven-day-per-week U.S. residential delivery by FedEx Ground* • Significantly later pick up times offered with FedEx Extra Hours Service • Widespread retail convenience network with Walgreens, Dollar General, Albertson’s and our own FedE
Slide 15: Strong Portfolio of Residential Package Services
Pricing Strategy: Improving Revenue Quality • Focused on long-term profitable growth • Utilizing capacity for highest yielding customers • FedEx Express and FedEx Ground shipping rates increased by an average of 5.9% in January 2024 • FedEx Freight shipping rates increased by an average of 5.9%-6.9%
Slide 16: FedEx Ground Revenue Market Share Has Grown to More Than 30%
FedEx Ground Revenue Market Share Has Grown to More Than 30% $110 50% $100 Revenue ($ Billions) $90 40% $80 Market Share $70 30% $60 $50 20% $40 $30 $20 10% $10 $0 0% CY98 CY99 CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 Fed
Slide 17: LTL Industry Revenue Market Share
LTL LTL Industry IndustryRevenue RevenueMarket MarketShare Share 30% FedEx Yellow XPO TForce ODFL ABFS Saia 25% 20% 15% 10% 5% 0% CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 Source: FedEx Analysis 33 FedEx Commits to Goal to Achieve Carbon-Neut
Slide 18: Environmental, Social, and Governance
Environmental, Social, and Governance Our Planet • Through FedEx’s collective emissions reduction efforts, we decreased carbon dioxide ( CO2e ) emissions intensity - on a revenue basis – by 48.9% from FY09 through FY22. • FedEx’s fleet modernization efforts saved over 150 million gallons of jet fuel
Slide 19: Corporate Operating Margin / Earnings Per Share
Corporate Operating Margin 8.0% 7.4% 7.3% 7.0% 6.7% 7.0% 6.0% 6.0% 5.4% 5.0% 4.5% 4.0% 3.5% 3.0% 2.0% 1.0% 0.0% FY20 FY21 FY22 FY23 GAAP Adjusted Non-GAAP reconciliations are included herein. See Appendix. 37 Earnings Per Share $25.00 $20.61 $19.45 $20.00 $18.17 $15.48 $14.96 $15.00 $14.33 $10.00 $9
Slide 20: Capital Expenditures / Dividends Per Share
Capital Expenditures (% of Revenues) 10.0% 9.5% 9.0% 8.7% 8.5% 8.5% 8.0% 7.9% 7.5% 7.2% 7.0% 7.0% 6.8% 6.5% 6.0% 5.5% 5.0% FY18 FY19 FY20 FY21 FY22 FY23 39 Dividends Increased at a 5-Year CAGR of 18% $5.00 $4.60 $4.50 IN LAST 5 YEARS, $4.00 WE HAVE RETURNED TO SHAREHOLDERS $3.50 Dividends Per Share
Slide 21: Appendix: Non-GAAP Financial Measures
APPENDIX 41 Non-GAAP Financial Measures Our fiscal 2024 earnings per share (EPS) forecast is a non-GAAP financial measure because it excludes fiscal 2024 mark-to-market (MTM) retirement plans accounting adjustments and estimated costs related to business optimization initiatives in fiscal 2024. Our
Slide 22: FY23 and FY22 Reconciliation for FedEx Corp.
FY23 Reconciliation for FedEx Corp. Op Op Income Net Diluted Dollars in millions, except EPS Income Margin1 Taxes2 Income3 EPS GAAP measure $4,912 5.4% $1,391 $3,972 $15.48 MTM retirement plans --- --- (157) (493) (1.92) accounting adjustment4 Business optimization 273 0.3% 64 209 0.81 costs5 Goodwi
Slide 23: FY21 and FY20 Reconciliation for FedEx Corp.
FY21 Reconciliation for FedEx Corp. Dollars in millions, except EPS Op Op Income Net Diluted Income Margin Taxes2 Income3 EPS1 GAAP Measure $5,857 7.0% $1,443 $5,231 $19.45 Mark-to-Market Retirement Plans --- --- (281) (895) (3.33) Accounting Adjustments4 Loss on Debt Extinguishment --- --- 96 297 1
Slide 24: FY24 earnings per share forecast / FY23 operating income reconciliation
FY24 earnings per share forecast Dollars in millions, except EPS Adjustments Diluted Earnings Per Share Earnings per diluted share before MTM retirement plans accounting adjustments (non- $15.65 to $16.65 GAAP)9 Business optimization costs $530 Income tax effect2 (125) Net of tax effect $405 1.60 Ea
Slide 25: FY24 outlook midpoint operating income forecast
FY24 outlook midpoint operating income forecast Dollars in millions Operating income (GAAP measure) $5,770 Business optimization costs 530 Adjusted operating income (non-GAAP) $6,300 49 Footnotes for Non-GAAP Reconciliation Slides 1 – Does not sum to total due to rounding. 2 – Income taxes are based