FedEx Corporation · NYSE:FDX
FedEx — Non-Deal Roadshow (June 2024)
25 slides from FedEx's roadshow presentation, Jun 25, 2024
Slide 1: Forward-looking statements & non-GAAP financial measures
6/25/2024 Investor Relations June 25, 2024 1 Forward-looking statements & non-GAAP financial measures Certain statements in this presentation may be considered forward-looking statements, such as statements regarding expected cost savings, the optimization of our network through Network 2.0, future
Slide 2: Unmatched global network; Broad portfolio of services
6/25/2024 Unmatched global network Linking more than 99% of world’s GDP Over 220 698 More than Delivers More than countries aircraft 5,000 ~15M 500,000 and and more operating shipments employees territories, than facilities; per day* worldwide including 210,000 more than every motorized 650 address
Slide 3: Bundle of solutions; FY25 outlook
6/25/2024 Bundle of solutions % of revenue • Our portfolio of solutions creates a strong value proposition Express 0.9% • 96.7% of U.S. revenue comes from customers of two or E+G E+F more transportation services 17.1% 0.1% E+G+F 79.2% • We manage service offerings as a portfolio for the benefit Grou
Slide 4: Framework
6/25/2024 Illustrative operating income bridge based on the midpoint of FY25 adjusted EPS* outlook $2.2B $7.2B $6.2B $0.1B ($0.5B) ($0.4B) ($0.3B) ($0.1B) FY24 Revenue, USPS International Fewer Variable DRIVE FY25E adjusted net of cost contract export yield Operating comp adjusted operating increase
Slide 5: DRIVE is changing the way we work
6/25/2024 DRIVE is changing the way we work Achieved target of $1.8B in structural cost-out in FY24 Air Network & Intl. G&A Savings Surface Network • Delivered ~$500M in cost • Delivered ~$550M in cost • Delivered ~$750M in cost savings in FY24 savings in FY24 savings in FY24 • Savings driven by str
Slide 6: Well-positioned to capture opportunity in a large and growing market
6/25/2024 Well-positioned to capture opportunity in a large and growing market E-commerce remains the growth B2B higher-margin verticals engine of parcel volume demand top-tier service • ~90% of expected parcel industry • Target segments generate high growth comes from e-commerce* margins • Anticipa
Slide 7: Surface network initiatives to deliver $1.2B in cost savings in FY25
6/25/2024 Surface network initiatives to deliver $1.2B in cost savings in FY25 Linehaul operations Dock operations P&D operations U.S. surface operations $450M $300M $150M $300M Safety Improving outcomes Achieved $750M in Surface Network structural cost-outs in FY24 13 Providing structural cost redu
Slide 8: Delivering transformational improvement; Global Air Network
6/25/2024 Delivering transformational improvement Global Air Network Europe ~$700M in FY25 ~$600M in FY25 Tracked through KPIs that monitor Cost per Cost per available Asset success (key indicators) pound ton mile utilization Achieved $500M in Air Network & International structural cost-outs in FY24
Slide 9: Optimizing profitability across European networks
6/25/2024 Optimizing profitability across European networks Focusing Europe on execution and enhancing profitability Air Road P&D Domestic >750 flights 28 road hubs and >600 stations Lowering per week >50K connections across 32 cost to serve per week countries Information as of April 2023 17 Europe:
Slide 10: G&A: Building momentum with significant value potential
6/25/2024 G&A: Building momentum with significant value potential Procurement Functional excellence Technology $600M in FY25 $400M in FY25 $500M in FY25 Achieved $550M in G&A structural cost-outs in FY24 19 Realizing functional excellence across the enterprise Leaner, Tech-enabled Streamlined nimble
Slide 11: Value creation framework through FY25
6/25/2024 Value creation framework through FY25 Expected ($B) FY25 savings* Highlights Surface Network $1.2 • Moving swiftly to execute; measuring from FY23 baseline Air Network & International 1.3 • Network 2.0 to unlock $2B of G&A 1.5 cost savings in FY27 • One FedEx is a key execution Total $4.0
Slide 12: Financial framework; Capital allocation priorities
6/25/2024 Financial framework Potential tailwinds: • Normalized e-commerce growth $100B 10% • 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* • Timin
Slide 13: FedEx Business Trends
6/25/2024 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 ou
Slide 14: Pricing Strategy; Strong portfolio of residential package services
6/25/2024 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
Slide 15: Ground revenue market share has grown to more than 30%
6/25/2024 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
Slide 16: LTL industry revenue market share; Environmental, Social, and Governance
6/25/2024 LTL Industry Revenue Market Share LTL industry revenue market 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 31 Environmental, Social, and Gove
Slide 17: Our goal: Carbon neutral global operations by 2040
6/25/2024 Our goal: Carbon neutral global operations by 2040 Key steps we’re taking toward our goal: Vehicle Electrification. By 2040, we aim for Fuel Conservation and Aircraft Modernization. entire FedEx parcel pickup and delivery FedEx will build on its successful FedEx Fuel (PUD) fleet to be zero
Slide 18: Consolidated operating margin; Earnings per share
6/25/2024 Consolidated operating margin 8.0% 7.4% 7.3% 7.1% 7.0% 7.0% 6.7% 6.3% 6.0% 6.0% 5.4% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY21 FY22 FY23 FY24 GAAP Adjusted Non-GAAP reconciliations are included herein. See Appendix. 35 Earnings per share $25.00 $20.61 $20.00 $19.45 $18.17 $17.21 $17.80 $15.48 $14
Slide 19: Capital expenditures; Dividends Per Share
6/25/2024 Capital expenditures (% of Revenues) 10.0% 9.0% 8.7% 8.5% 7.9% 8.0% 7.2% 7.0% 6.8% 7.0% 5.9% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY18 FY19 FY20 FY21 FY22 FY23 FY24 Non-GAAP reconciliations are included herein. See Appendix. 37 Dividends increased at a 5-Year CAGR of 14% $6.00 $5.04 Over the
Slide 20: Appendix: Non-GAAP financial measures
6/25/2024 Appendix 39 Non-GAAP financial measures Long-term Adjusted Operating Margin and Adjusted Dividend Payout Ratio We have provided forecasts for long-term consolidated adjusted operating margin and adjusted dividend payout ratio. Our adjusted dividend payout ratio is calculated as cash divide
Slide 21: FY24 reconciliation for FedEx Corporation
6/25/2024 FY24 reconciliation for FedEx Corporation Diluted Operating Operating Income Net Dollars in millions, except EPS Earnings Income Margin Taxes1 Income2 Per Share3 GAAP measure $5,559 6.3% $1,505 $4,331 $17.21 MTM retirement plans — 0.0% (135) (426) (1.69) accounting adjustment4 Business opt
Slide 22: FY22 reconciliation for FedEx Corporation
6/25/2024 FY22 reconciliation for FedEx Corporation Diluted Operating Operating Income Net Dollars in millions, except EPS Earnings Income Margin Taxes1 Income2 Per Share GAAP measure $6,245 6.7% $1,070 $3,826 $14.33 Mark-to-Market Retirement Plans Accounting — — 379 1,199 4.49 Adjustments4 Business
Slide 23: FY25 outlook midpoint operating income forecast
6/25/2024 FY25 outlook midpoint operating income forecast Dollars in millions Operating income (GAAP measure) $6,640 Business optimization costs 560 Adjusted operating income (non-GAAP) $7,200 45 FY25 earnings per share forecast Dollars in millions, except EPS Adjustments Diluted Earnings Per Share
Slide 24: FY24 and FY23 return on invested capital
6/25/2024 FY24 and FY23 return on invested capital Dollars in millions Fiscal 2024 Fiscal 2023 Numerator Adjusted operating income (non-GAAP) $6,241 $5,373 Provision for income taxes (non-GAAP)11 (1,548) (1,386) Adjusted operating income after taxes (non-GAAP) $4,693 $3,987 Denominator Average inves
Slide 25: Footnotes for non-GAAP reconciliation slides
6/25/2024 Footnotes for non-GAAP reconciliation slides 1. Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction. 2. Effect of “total other (expense) income” on net income amount not shown. 3. Does not sum to total due to rounding. 4. The MTM retiremen