FedEx Corporation

Strong Q3 results; momentum driven by FEC + Peak execution - Revenue +8% YoY (yields and volume strength across nearly all package services). - Adjusted operating income +7% YoY; Adjusted EPS +16% YoY (noted one-time tax benefit of $0.41 from a favorable effective tax rate impact on Brazil restructuring). - Management emphasized this was their most profitable peak season and that sequential seasonality is “structurally” changing due to forecasting/operations improvements and Network 2.0/efficiency gains.

Updated FY26 outlook raised; Q4 expected to be strong but with less sequential step-up - Raising FY’26 adjusted EPS to $19.30–$20.10 per diluted share (from $17.80–$19). - Q4 embedded view: EPS around ~$5.80 at the midpoint (highest quarterly earnings of the year), but not expecting as large a sequential increase as in prior years due to peak strength being higher in Q3 plus accounting/timing skews: - One-time tax benefit in Q3 - FedEx Freight Q4 gain on facility sale in prior year - Also disclosed Q4 embedded headwinds: - No incremental share repurchases in Q4 → expected EPS headwind from dilution (assumes ~242M shares; FY average expected ~239M). - Higher interest costs tied to FedEx Freight debt issuance → combined impact ~$0.10 sequential and YoY EPS headwind.

FEC (FedEx Express) strength and margin expansion; Freight remains pressured by LTL + spin costs - FEC: Revenue +10%; adjusted operating margin +50 bps; 6th consecutive quarter of margin expansion; adjusted operating income +18%. - Key enablers: - B2B verticals: nearly half of Q3 revenue growth driven by B2B services. - Pricing/yield improving: U.S. domestic package yield +5%, international export yield +6%. - Operational efficiency + Network 2.0 rollout. - FedEx Freight: Revenue down 5% YoY (shipments pressured by LTL industry weakness). - Adjusted operating income down $127M YoY; separation-related costs ~$60M in Q3 not adjusted out (spin-related). - Q4 Freight view (per John): FedEx Freight revenue flat to down slightly and adjusted operating income down YoY, mainly from LTL softness + higher separation costs and tougher comparisons.