FedEx Corporation · NYSE:FDX
FedEx — Non-Deal Roadshow (December 2022)
43 slides from FedEx's roadshow presentation, Dec 20, 2022
Slide 1: FedEx Corporation Investor Relations
FedEx Corporation Investor Relations December 20, 2022
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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, future financial targets, business strategies, management’s views with respect to future events and fin
Slide 3: Unmatched Global Network Links More Than 99% of World's GDP
Unmatched Global Network Links More Than 99% of World’s GDP • Over 220 countries and territories, every address in the U.S. • Over 700 aircraft and more than 215,000 motorized vehicles • More than 5,000 operating facilities; more than 650 airports served worldwide • Delivers more than 15M shipments
Slide 4: Broad Portfolio of Services
Broad Portfolio of Services FY22 Revenues: $93.5 billion Employees: More than 550,000 Countries and Territories Served: More than 220 $45.8 Billion 49% Express $33.2 Billion 36% Ground $9.5 Billion 10% Freight $5.0 Billion* 5% Other & eliminations* FedEx Express, FedEx Ground, and FedEx Freight show
Slide 5: Strategic Operating Principles
Strategic Operating Principles Deliver Today, Innovate for Tomorrow Compete Collectively Operate Collaboratively Innovate Digitally • FedEx brand unites • Strategic shift to build a • Innovating Executive long-termdigitally incentives distinct operating holistic approach that allows FedEx to build l
Slide 6: Bundle of Solutions
Bundle of Solutions % of Revenue • Our portfolio of solutions creates a strong value proposition • 96.9% of U.S. revenue comes from FedEx Express (FXE) 1.0% customers of two or more operating companies FXE+FXG FXE+FXF 15.4% 0.2% • We manage service offerings as All Opcos a portfolio for the benefit
Slide 7: Now expect FY23 cost savings of ~$3.7B vs. Plan
Now expect FY23 cost savings of ~$3.7B vs. Plan - Flight reductions - Reducing vendor utilization - Sort closures & consolidations - Productivity enhancements - Deferring certain technology projects - Refined peak pay premiums - Sort closures - Closing certain FedEx Office locations - Reduction of S
Slide 8: Fiscal 2023 Outlook
Fiscal 2023 Outlook Outlook as of December 20, 2022 Key assumptions • Volume: dynamics remain fluid; expect Adj. EPS* $13.00 - $14.00 softness to persist through balance of FY23 • Yield: increasingly pressured as year-over-year Effective tax rate** 25% - 26% fuel surcharge comparisons normalize and
Slide 9: Global Transformation Program: more than ~$4 billion cost savings by FY25
By FY25, under the Global Transformation Program, FedEx is targeting more than ~$4 billion in incremental annualized cost savings compared to FY22 in support of “Deliver Today, Innovate for Tomorrow” strategy • Procurement • Shared service consolidation • Back office automation and modernization • D
Slide 10: Network 2.0: $2B+ Future Value Unlocked by FY27
Network 2.0 ► OPERATIONAL INSIGHTS PLATFORM ► IMPROVED ASSET EFFICIENCY ► EFFICIENT WAYS OF WORKING $2B+ FUTURE VALUE UNLOCKED BY FY27 ~ $2B ONE-TIME EXPENSE INITIAL GOALS BY FY27 100 FEWER STATIONS THAN TODAY 10%+ P&D ROUTE EFFICIENCY VS. TODAY OPTIMIZED LINEHAUL NETWORK *Network 2.0 incremental to
Slide 11: FY25 Priorities
FY25 Priorities D E L I V E R T O D AY S T R AT E G I C I M P E R AT I V E S • Target attractive market segments Drive yields through service • Drive market-leading service levels • Continued focus on revenue quality Expand margins • Ground: 11 - 12% adjusted margins by FY25* through lower cost to •
Slide 12: Lower Capital Intensity
Lower Capital Intensity C A P I TA L E X P E N D I T U R E S Operational, technological, and digital innovation to maximize utilization 7.9% 7.2% 6.5% of revenue of revenue of revenue Rigorous 'ROIC lens’ to all new capital outlays FY18-FY21 FY22 FY25 Target Steady reduction over forecast period and
Slide 13: FY25 Financial Outlook
FY25 Financial Outlook C O N S O L I D AT E D A D J U S T E D D I V I D E N D P AY O U T * O P. M A R G I N * 10% +25%+ 7.3% 16% $94B FY22 FY25 FY22 FY25 ROIC* CAPEX (% of revenue) 11.5%+ ≤6.5% 7.2% 7.2% 9.7% 16% FY22 FY25 FY22 FY25 *Non-GAAP financial measure; see appendix for more information; div
Slide 14: Executive Compensation Program Enhancements
Executive Compensation Program Enhancements Long Term Incentive (LTI) program targets for FY23-25 include: 1. Earnings per share (EPS) (50%) 2. New performance metric tied to FedEx’s total shareholder return (TSR) relative to S&P 500 index (25%) 3. Capital expenditures as a percentage of revenue (25
Slide 15: Positioning for Long-Term Growth
Positioning for Long-Term Growth • E-commerce, including B2B e-commerce, is increasing demand for our services • FedEx Express has completed physical integration of TNT Express and is continuing to transform and optimize the FedEx Express international business while modernizing its aircraft fleet a
Slide 16: FedEx Business Trends Meeting E-Commerce Demands
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: 94% of People in the United States within 5 miles of a FedEx hold location
94% of People in the United States are 94% of People in the United States are within 5 miles of a FedEx hold location within 5 miles of a FedEx hold location • Customers want to drop off or pick up at places convenient to their everyday lives — the FedEx retail convenience network offers nearly 60,0
Slide 18: Pricing Strategy: Improving Revenue Quality
Pricing Strategy: Improving Revenue Quality • Focused on long-term profitable growth • Utilizing capacity for highest yielding customers • FedEx Express and FedEx Ground increasing shipping rates an average of 6.9% in January 2023 • FedEx Freight increasing rates an average of 6.9% to 7.9% in Januar
Slide 19: FedEx Express Long-Term Opportunity
FedEx Express Long-Term Opportunity • FY25 Adjusted Operating Margin Target of 8-9%1 • Profitability through lower cost-to- serve in a fully-integrated Europe • Reduced capital intensity • Modernizing air fleet for greater reliability and energy efficiency • Continuing yield management 1. Non-GAAP f
Slide 20: Sustained FedEx Express Profit Growth in Europe
Sustained FedEx Express Profit Growth in Europe • Air network integration • SG&A reduction • Continued business optimization
Slide 21: FedEx Ground
FedEx Ground We have invested to develop a ‘future-ready’ network 11 - 12% • Superior service, innovation, and speed FEDEX GROUND ADJUSTED OPERATING advantage MARGIN • TARGET Three distinct BY FY25* services: FedEx Ground Commercial®, FedEx Home Delivery®, FedEx Ground Economy® • Flexible business m
Slide 22: FedEx Ground: Achieving sustained double-digit margin
FedEx Ground: Achieving sustained double-digit margin • FY25 Adjusted Operating Margin Target of 11-12% 1 • Focus on maximizing asset utilization and ROIC • Consistent safety and service excellence 1. Non-GAAP financial measure; see appendix for more information
Slide 23: Strong Portfolio of Residential Package Services
Strong Portfolio of Residential Package Services FedEx Express FedEx Ground FedEx Ground • 1–2 days transit time Home Delivery: Ground Economy: • Time-definite • 1–5 days transit time • 2–8 days transit time • MBG* • Day-definite • No MBG • Declared value up • MBG* • No declared value to $50K • Decl
Slide 24: 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% CY98CY99CY00CY01CY02CY03CY04CY05CY06CY07CY08CY09CY10CY11CY12CY13CY14CY15CY16CY17CY18CY19CY20CY21 FedEx Ground Revenue FedEx Ground Re
Slide 25: FedEx Freight Competitive Advantages
FedEx Freight Competitive Advantages • The only nationwide LTL that offers Priority and Economy services from one network • Priority: Fastest published times of any nationwide LTL* • Focused on improving margins with a better balance of volume, pricing, and capacity • FedEx Freight Direct service ad
Slide 26: FedEx Freight: Driving 20–22% adjusted operating margin by FY25
FedEx Freight: Driving 20 – 22% adjusted operating margin by FY25* Improve revenue quality Pricing discipline and profitable share growth Invest in our people and network Deliver outstanding service Continue to innovate Dimension in Motion and RFID Technology *Non-GAAP financial measure; see appendi
Slide 27: LTL Industry Revenue Market Share
LTL LTL Industry Industry Revenue Market Share Revenue Market 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 Source: FedEx Analysis * UPS Freight acquired by TFI on April 30, 2021
Slide 28: FedEx Commits to Goal to Achieve Carbon-Neutral Operations by 2040
FedEx Commits to Goal to Achieve Carbon-Neutral Operations by 2040 Key steps toward reaching the carbon neutral goal include: Vehicle Electrification. By 2040, the entire FedEx parcel pickup and delivery fleet will be zero–emission electric vehicles Sustainable Fuels. FedEx will continue to invest i
Slide 29: Corporate Social Responsibility
Corporate Social Responsibility Environmental Impact • In FY21, through FedEx’s collective emissions reduction efforts, we decreased carbon dioxide ( CO2e ) emissions intensity - on a revenue basis – by 45% from FY09 through FY21. • Through FY21, FedEx Express has improved vehicle fuel efficiency by
Slide 30: Corporate Social Responsibility - Awards & Recognition
Corporate Social Responsibility - Awards & Recognition • 100 Best Companies to Work For 2022 - FORTUNE • World’s Most Admired Companies 2022 - FORTUNE • This is the 22nd consecutive year that FedEx has ranked among the top 20 in the FORTUNE Most Admired Companies List. • America’s Most Responsible C
Slide 31: Corporate Operating Margin
Corporate Operating Margin 8.0% 7.5% 7.4% 7.3% 7.0% 7.0% 6.7% 6.4% 6.0% 5.0% 4.5% 4.0% 3.5% 3.0% 2.0% 1.0% 0.0% FY19 FY20 FY21 FY22 GAAP Adjusted Non-GAAP reconciliations are included herein. See Appendix
Slide 32: Earnings Per Share
Earnings Per Share $25.00 $20.61 $20.00 $19.45 $18.17 $14.33 $15.52 $15.00 $10.00 $9.50 $4.90 $5.00 $2.03 $0.00 FY19 FY20 FY21 FY22 GAAP Adjusted Non-GAAP reconciliations are included herein. See Appendix
Slide 33: Capital Expenditures
Capital Expenditures (% of Revenues) 10.0% 9.0% 8.5% 8.7% 8.5% 7.9% 8.0% 7.2% 7.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY17 FY18 FY19 FY20 FY21 FY22
Slide 34: Dividends Per Share
Dividends Increased at a 5-Year CAGR of 13% $3.50 $3.00 $3.00 IN LAST 5 YEARS, $2.60 $2.60 $2.60 $2.50 WE HAVE RETURNED Dividends Per Share $2.00 $2.00 $3.4B $1.60 in dividend payments $1.50 $1.00 $4.7B $1.00 $0.80 in share repurchases 16% $0.48 $0.52 $0.56 $0.60 $0.50 $0.28 $0.32 $0.36 $0.40 $0.44
Slide 35: Appendix
APPENDIX
Slide 36: Explanatory Note on Non-GAAP Financial Measures
Explanatory Note on Non-GAAP Financial Measures The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-GAA
Slide 37: FY22 Reconciliation for FedEx Corp.
FY22 Reconciliation for FedEx Corp. Dollars in millions, except EPS Op Op Income Net Diluted Income Margin Taxes1 Income2 EPS GAAP Measure $6,245 6.7% $1,070 $3,826 $14.33 Mark-to-Market Retirement Plans --- --- 379 1,199 4.49 Accounting Adjustments4 Business realignment costs6 278 0.3% 64 214 0.80
Slide 38: FY21 Reconciliation for FedEx Corp.
FY21 Reconciliation for FedEx Corp. Dollars in millions, except EPS Op Op Income Net Diluted Income Margin Taxes1 Income2 EPS3 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 39: FY20 Reconciliation for FedEx Corp.
FY20 Reconciliation for FedEx Corp. Dollars in millions, except EPS Op Op Income Net Diluted Income Margin Taxes1 Income2 EPS GAAP Measure $2,417 3.5% $383 $1,286 $4.90 Mark-to-Market Retirement Plans — — 211 583 2.22 Accounting Adjustments4 Goodwill And Other Asset Impairment 435 0.6% 19 416 1.58 C
Slide 40: FY19 Reconciliation for FedEx Corp.
FY19 Reconciliation for FedEx Corp. Dollars in millions, except EPS Op Op Income Net Diluted Income Margin3 Taxes1 Income2 EPS GAAP Measure $4,466 6.4% $115 $540 $2.03 Mark-to-Market Retirement Plans --- --- 902 2,981 11.22 Accounting Adjustments4 TNT Express Integration Expenses5 388 0.6% 74 314 1.
Slide 41: FY23 Earnings Per Share Forecast
FY23 Earnings Per Share Forecast Diluted Earnings Dollars in millions, except EPS Adjustments Per Share Earnings per diluted share (non-GAAP)9 $12.50 to $13.50 Business optimization costs $150 Income tax effect1 (35) Net of tax effect $115 0.45 Business realignment costs $16 Income tax effect1 (4) N
Slide 42: Footnotes for Non-GAAP Reconciliation Slides
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 retirement plans
Slide 43: Full-Year Fiscal 2022 Return on Invested Capital and Adjusted Dividend Payout Ratio
Full- Year Fiscal 2022 Notes: Return on Invested Capital 1 – Represents the hypothetical interest expense implied within rentals expenses the company would incur if property Dollars in millions under operating leases were owned or accounted for as finance leases. Estimated using the weighted-average