FedEx Corporation · NYSE:FDX
FedEx — Non-Deal Roadshow (September 2023)
27 slides from FedEx's roadshow presentation, Sep 20, 2023
Slide 1: FedEx Corporation Investor Relations
FedEx Corporation Investor Relations September 20, 2023 1 Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this presentation may be considered forward-looking statements, such as statements regarding expected cost savings, the planned consolidation of operating compan
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. • 711 aircraft and more than 210,000 motorized vehicles • More than 5,000 operating facilities; more than 650 airports served worldwide • Delivers ~14.5M shipments pe
Slide 3: Bundle of Solutions; Streamlining organization to achieve long-term strategy
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 • We manage service offerings as 16.6% All 0.1% Opcos a portfolio for the benefit
Slide 4: One FedEx; Updating FY24 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 Updating FY24 outlook June 2023 Sept 2023 Commentary: • Expect business
Slide 5: Illustrative midpoint FY24 outlook bridge; Framework
Illustrative midpoint FY24 outlook bridge $1.8B $6.3B $0.5B ($0.8B) $5.4B ($0.6B) 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 Appendix for more information 9 F
Slide 6: Building momentum with significant value potential; Executive Sponsors
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
Framework Customer Surface Network Air Network & International Network 2.0 G&A 13 13 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 • Tar
Slide 8: Differentiation for premium segments
Differentiation for premium segments Focus on high-value segments Market leading value proposition for SMB Business-to-business (B2B) Weekend coverage Faster service Healthcare Loyalty program Earned discounts Small and medium businesses (SMB) Modern FedEx Ship Manager® 15 15 Framework Customer Surf
Slide 9: 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 17 Network 2.0 - Interoperable network eliminates redundancy, generating $2B
Slide 10: 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 11: Positioned to deliver transformational improvement; Global Air Network
Positioned to deliver 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 21 Global Air Network: Lowering cost to serve through structural improvem
Slide 12: Optimizing profitability across European networks
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 23 Europe: Strong progress on identified opportun
Slide 13: G&A - Building momentum with significant value potential
Framework Customer Surface Network Air Network & International Network 2.0 G&A 25 G&A - Building momentum with significant value potential Procurement Functional excellence Technology $600M in FY25 $400M in FY25 $500M in FY25 26 13
Slide 14: Realizing functional excellence; Value creation framework through FY25
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 15: Financial framework; Reaffirming 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 16: FedEx Business Trends; 94% of People within 5 miles
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, and our own FedEx Office loca
Slide 17: Pricing Strategy; 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 will increase by an average of 5.9% in January 2024 • FedEx Freight shipping rates will increase by an average of 5
Slide 18: FedEx Ground Market Share; FedEx Freight Competitive Advantages
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 FedEx Gr
Slide 19: LTL Industry Revenue Market Share; Carbon-Neutral Operations by 2040
LTL LTL Industry IndustryRevenue RevenueMarket MarketShare Share 30% FedEx Yellow XPO TFI 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 Source: FedEx Analysis 37 FedEx Commits to Goal to Achieve Carbon-Neutral Oper
Slide 20: 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 21: 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. 41 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 22: Capital Expenditures; Dividends Per Share
Capital Expenditures (% of Revenues) 10.0% 9.5% 9.0% 8.7% 8.5% 8.5% 7.9% 8.0% 7.5% 7.2% 7.0% 7.0% 6.8% 6.5% 6.0% 5.5% 5.0% FY18 FY19 FY20 FY21 FY22 FY23 43 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 23: Appendix: Non-GAAP Financial Measures
APPENDIX 45 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 24: 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 25: 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 26: FY24 EPS 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- $15.10 to $16.60 GAAP)9 Business optimization costs 620 Income tax effect2 (145) Net of tax effect $475 1.90 Ear
Slide 27: Footnotes for Non-GAAP Reconciliation Slides
FY24 outlook midpoint operating income forecast Dollars in millions, except EPS Operating income (GAAP measure) $5,680 Business optimization costs 620 Adjusted operating income (non-GAAP) $6,300 53 Footnotes for Non-GAAP Reconciliation Slides 1 – Does not sum to total due to rounding. 2 – Income tax