Today's investors meeting outlines strategic roadmap to deliver for customers, stockholders, and team members
Adjusted consolidated operating income targeted to increase $3.0–$4.5 billion in fiscal 2025 vs. fiscal 2022
Fiscal 2025 ratio of capital expenditures to revenue expected to be at or below 6.5%
Adjusted earnings per share (EPS) expected to grow between 14–19% CAGR through fiscal 2025
Targeting 18–22% annualized Total Shareholder Return (TSR) through fiscal 2025

FedEx Corp. (NYSE:FDX) is hosting an investors meeting today where President and Chief Executive Officer Raj Subramaniam and the FedEx leadership team will present a strategic plan to deliver more value for customers, stockholders, and team members. FedEx will also outline its fiscal 2025 financial targets.

"The FedEx team and its unparalleled network have been connecting the world and creating opportunities since our founding," Subramaniam said. "As we enter the next phase of FedEx, we will unlock value from this foundation to deliver outstanding returns to all of our stakeholders. Our strategy is focused on driving yields, expanding margins, and elevating returns through profitable growth and capital efficiency. We have tremendous momentum and a committed leadership team focused on delivering today, while innovating for tomorrow."

Fiscal 2025 Financial Targets

FedEx is targeting to deliver 18–22% annualized TSR through fiscal 2025 based upon these balanced financial goals for fiscal 2025:

4–6% compound annual revenue growth through fiscal 2025
10% adjusted consolidated operating margin, driven by
- 11–12% FedEx Ground adjusted operating margin
- 8–9% FedEx Express adjusted operating margin
- 20–22% FedEx Freight adjusted operating margin
Adjusted dividend payout ratio of at least 25%
Ratio of capital expenditures to revenue equal to or less than 6.5% and an increase of 200 basis points in FedEx's return on invested capital (ROIC) compared to fiscal 2022
Fiscal 2025 adjusted consolidated operating income improvement of $3.0–$4.5 billion compared to fiscal 2022 adjusted consolidated operating income
Compound annual growth rate for adjusted EPS of 14–19% through fiscal 2025.

Deliver Today, Innovate for Tomorrow Strategy

The FedEx executive leadership team will discuss its strategy and detailed plans to Deliver Today, Innovate for Tomorrow during today's investors day. The plans will guide the company's short- and long-term priorities to maximize value for customers, stockholders, and team members.

During today's presentations, the leadership team will focus on how FedEx is Delivering Today by:

Delivering revenue quality with a differentiated value proposition, targeting high-value customer segments
Expanding margins through more efficient networks
Increasing stockholder returns through profitable growth, lowered capital intensity, and increased ROIC focus

The leadership team will also outline how FedEx is Innovating for Tomorrow by:

Enabling intelligent supply chains by leveraging its technology, data, and digital capabilities
Leading through its continued commitment to sustainability
Reinventing work and empowering people

Speakers will include Subramaniam; Mike Lenz, executive vice president and chief financial officer; Brie Carere, executive vice president and chief customer officer; and other key members of the FedEx executive leadership team.

Webcast and Materials

The Investors Meeting will be streamed beginning at 8:30 a.m. CDT on June 29, 2022 at investors.fedex.com. Individuals may view the presentation and download the materials presented during the meeting. This release contains only a short summary of the information to be presented and should be read in conjunction with the management presentations and other materials, including the appendix of non-GAAP financial measures, made available on the Investor Relations website.

Corporate Overview

FedEx Corp. (NYSE:FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce, and business services. With annual revenue of $94 billion, the company offers integrated business solutions through operating companies competing collectively, operating collaboratively, and innovating digitally under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its 550,000 employees to remain focused on safety, the highest ethical and professional standards, and the needs of their customers and communities. FedEx is committed to connecting people and possibilities around the world responsibly and resourcefully, with a goal to achieve carbon-neutral operations by 2040. To learn more, please visit fedex.com/about.

Additional information is contained in the company's annual report on Form 10-K, Form 10-Qs, Form 8-Ks, and Statistical Books. These materials are available on the company's website at investors.fedex.com. The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our Securities and Exchange Commission (SEC) filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media, and others interested in the company to visit this website from time to time, as information is updated and new information is posted.

Certain statements in this press release may be considered forward-looking statements, such as statements regarding future financial targets, business strategies, management's views with respect to future events and financial performance, and the assumptions underlying such targets, strategies, and statements. Forward-looking statements include those preceded by, followed by, or that include the words "will," "may," "could," "would," "should," "believes," "expects," "forecasts," "anticipates," "plans," "estimates," "targets," "projects," "intends," or similar expressions. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate; our ability to meet our labor and purchased transportation needs while controlling related costs; a significant data breach or other disruption to our technology infrastructure; the continuing effect of the COVID-19 pandemic; anti-trade measures and additional changes in international trade policies and relations; the effect of any international conflicts or terrorist activities, including as a result of the current conflict between Russia and Ukraine; our ability to successfully implement our business strategy, effectively respond to changes in market dynamics, and achieve the anticipated benefits and associated cost savings of such strategies and actions, including our ability to successfully implement our FedEx Express workforce reduction plan in Europe and to continue to transform and optimize the FedEx Express international business, particularly in Europe; our ability to achieve our fiscal 2025 financial performance goals; damage to our reputation or loss of brand equity; changes in the business or financial soundness of the U.S. Postal Service, including strategic changes to its operations to reduce its reliance on the air network of FedEx Express; changes in fuel prices or currency exchange rates, including significant increases in fuel prices as a result of the ongoing conflict between Russia and Ukraine; our ability to match capacity to shifting volume levels; the effect of intense competition; an increase in self-insurance accruals and expenses; our ability to effectively operate, integrate, leverage, and grow acquired businesses and realize the anticipated benefits of acquisitions and other strategic transactions; the future rate of e-commerce growth and our ability to successfully expand our e-commerce services portfolio; the timeline for recovery of passenger airline cargo capacity; evolving or new U.S. domestic or international laws and government regulations, policies, and actions; future guidance, regulations, interpretations, challenges, or judicial decisions related to our tax positions; legal challenges or changes related to service providers engaged by FedEx Ground and the drivers providing services on their behalf; our ability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography; our ability to achieve our goal of carbon-neutral operations by 2040; and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and FedEx Corp.'s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

The financial targets and guidance included in this press release reflect FedEx's expectations for fiscal years 2023 through 2025 and are provided on a non-GAAP basis as FedEx cannot predict certain items which are included in reported GAAP results. See "Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures" below for additional information on non-GAAP financial measures and reconciliations of non-GAAP financial measures to GAAP financial measures. The financial targets and outlook provided herein assume the company's current economic forecast and fuel price expectations, no additional COVID-19-related business restrictions, and no additional adverse geopolitical developments.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

TO GAAP FINANCIAL MEASURES

Fiscal 2022 and 2021 Financial Measures

FedEx reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP" or "reported"). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-GAAP (or "adjusted") financial measures, including our fiscal 2022 and 2021 consolidated adjusted operating income, adjusted operating margin, adjusted net income, and adjusted diluted earnings per share ("EPS"), fiscal 2022 consolidated return on invested capital ("ROIC"), and fiscal 2022 adjusted dividend payout ratio.

Adjusted Operating Income and Margin, Net Income, and Diluted EPS

Our fiscal 2022 and 2021 consolidated operating income and margin, net income, and diluted EPS have been adjusted to exclude, as applicable:

Mark-to-market ("MTM") retirement plans accounting adjustments in fiscal 2022 and 2021;
Business realignment costs in fiscal 2022 and 2021;
Costs related to a FedEx Ground legal matter in fiscal 2022;
TNT Express integration expenses incurred in fiscal 2022 and 2021; and
Loss on debt extinguishment in fiscal 2021.

We have provided these non-GAAP financial measures for the same reasons that were outlined in our fourth quarter fiscal 2022 earnings release issued on June 23, 2022.

Return on Invested Capital and Adjusted Dividend Payout Ratio

Our consolidated ROIC for fiscal 2022 is calculated, in part, using non-GAAP financial measures. Adjusted operating income is included in the numerator, as we believe it is most indicative of our core operating performance. We add back to adjusted operating income interest on average operating leases, which we believe improves the comparability of ROIC between FedEx and other companies with different capital structures, and subtract adjusted current income taxes calculated using our adjusted current income tax rate in order to determine the after-tax adjusted return earned in the current period. Additionally, one input of the denominator is average net working capital as of May 31, 2022 and May 31, 2021, adjusted to exclude (i) average cash and cash equivalents in excess of those required to support daily business operations and cash equivalents held in restricted offshore accounts from average current assets, as these items do not contribute to the generation of operating returns, and (ii) the current portion of long-term debt and operating lease liabilities from average current liabilities, as we consider these items part of total invested capital used to support the generation of operating returns. We have provided reconciliations of our 2022 adjusted current income tax rate to our 2022 current income tax rate and of our average adjusted total current assets and total current liabilities as of May 31, 2022 and May 31, 2021 to our average total current assets and total current liabilities as of May 31, 2022 and May 31, 2021 under "Full-Year Fiscal 2022—Return on Invested Capital" below.

We believe ROIC is a meaningful measure of how effectively we are deploying our key assets and using capital to generate profits. Numerous methods exist for calculating ROIC. Accordingly, the method used by FedEx may differ from the methods used by other companies. We encourage you to understand the methods used by another company to calculate ROIC before comparing its ROIC to ours.

Our adjusted dividend payout ratio for fiscal 2022 is calculated as cash dividends paid on our common stock in fiscal 2022 divided by fiscal 2021 adjusted consolidated net income. We calculate our adjusted dividend payout ratio, in part, using a non-GAAP financial measure that we believe excludes items that may not be indicative of, or are unrelated to, our core operating performance. We believe our adjusted dividend payout ratio is a meaningful measure of how effectively we have returned profits to holders of our common stock.

Fiscal 2023 and 2025 Forecasts

We have also provided forecasts for the following metrics for fiscal 2025: consolidated adjusted operating income and adjusted operating margin, adjusted net income, and adjusted EPS; adjusted FedEx Ground, FedEx Express, and FedEx Freight segment operating margins; adjusted dividend payout ratio; and ROIC. Additionally, we have provided an adjusted dividend payout ratio forecast for fiscal 2023.

Other than our forecasted adjusted dividend payout ratio for fiscal 2023, we do not provide a reconciliation of these non-GAAP financial forecasts to the most directly comparable GAAP forecasts because we are unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort. For example, we are unable to predict the amount of the fiscal 2025 MTM retirement plans accounting adjustments, as they are significantly impacted by changes in interest rates and the financial markets. Additionally, we may incur costs during fiscal 2023, 2024, and 2025 related to business optimization initiatives as well as other costs that are unrelated to our core operating performance and/or extraordinary in nature. We are currently unable to forecast the amount and timing of these additional costs. These items are inherently uncertain and depend on various factors, many of which are beyond our control, and as such, any associated estimate and its impact on our GAAP financial measures could vary materially.

Our non-GAAP financial measures are intended to supplement and should be read together with, and are not an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of our financial statements should not place undue reliance on these non-GAAP financial measures. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. As required by SEC rules, the tables below present a reconciliation of our fiscal 2022 and 2021 non-GAAP financial measures and fiscal 2023 forecasted adjusted dividend payout ratio to the most directly comparable GAAP measures.

Full-Year Fiscal 2022

	Operating					Income		Net		Diluted Earnings
Dollars in millions, except EPS	Income		Margin			Taxes¹		Income²		Per Share
GAAP measure	$	6,245		6.7	%	$	1,070	$	3,826	$	14.33
MTM retirement plans accounting adjustments³		—		—			379		1,199		4.49
Business realignment costs⁴		278		0.3	%		64		214		0.80
FedEx Ground legal matter⁵		210		0.2	%		50		160		0.60
TNT Express integration expenses⁶		132		0.1	%		29		103		0.39
Non-GAAP measure	$	6,865		7.3	%	$	1,592	$	5,502	$	20.61

Return on Invested Capital

Dollars in millions
*Numerator*
Adjusted operating income (non-GAAP)	$	6,865
Interest on average operating leases⁷		463
Adjusted operating income with add-back for interest on average operating leases	$	7,328
Adjusted current income taxes (non-GAAP)⁸		(870)
Lease-adjusted after-tax net operating income	$	6,458

Denominator⁹
Average adjusted net working capital¹⁰(non-GAAP)	$	3,714
Average net property and equipment		36,922
Average operating lease right-of-use assets, net		15,998
Average goodwill		6,768
Average other assets, net of other liabilities		3,393
Average invested capital	$	66,795
Return on invested capital		9.7%

Adjusted Dividend Payout Ratio

Dollars in millions
Cash dividends paid in fiscal 2022	$	793
Fiscal 2021 net income (GAAP)		5,231
Dividend payout ratio (GAAP)		15%


Cash dividends paid in fiscal 2022	$	793
Fiscal 2021 adjusted net income (non-GAAP)		4,885
Adjusted dividend payout ratio (non-GAAP)		16%

Full-Year Fiscal 2021

	Operating					Income		Net		Diluted Earnings
Dollars in millions, except EPS	Income		Margin			Taxes¹		Income²		Per Share¹¹
GAAP measure	$	5,857		7.0	%	$	1,443	$	5,231	$	19.45
MTM retirement plans accounting adjustments³		—		—			(281)		(895)		(3.33)
Loss on debt extinguishment		—		—			96		297		1.11
TNT Express integration expenses⁶		210		0.3	%		48		162		0.60
Business realignment costs⁵		116		0.1	%		26		90		0.33
Non-GAAP measure	$	6,183		7.4	%	$	1,332	$	4,885	$	18.17

Fiscal 2023 Adjusted Dividend Payout Ratio Forecast

Dollars in millions
Cash dividends expected to be paid in fiscal 2023	$	1,175
Fiscal 2022 net income (GAAP)		3,826
Dividend payout ratio (GAAP)		31%


Cash dividends expected to be paid in fiscal 2023	$	1,175
Fiscal 2022 adjusted net income (non-GAAP)		5,502
Adjusted dividend payout ratio (non-GAAP)		21%

Notes:

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 –	Reflects the year-end adjustment to the valuation of the company's defined benefit pension and other postretirement plans. For fiscal 2022, the MTM retirement plans accounting adjustments also include the second quarter TNT Express MTM retirement plans accounting adjustment related to a noncash loss associated with the termination of a TNT Express European pension plan and a curtailment charge related to the U.S. FedEx Freight pension plan. For fiscal 2021, the MTM retirement plans accounting adjustments also include the second quarter TNT Express MTM retirement plans accounting adjustment related to a noncash loss associated with amending a TNT Express European pension plan to harmonize retirement benefits.
4 –	Business realignment costs were recognized at FedEx Express.
5 –	These charges were recognized at FedEx Corporation.
6 –	These expenses were recognized at FedEx Corporation and FedEx Express.
7 –	Represents the hypothetical interest expense implied within rentals expenses the company would incur if property under operating leases were owned or accounted for as finance leases. Estimated using the weighted-average discount rate for operating leases, which was 2.85% for 2022, applied to the total of the average current and long-term operating lease liabilities as of May 31, 2022 and May 31, 2021, respectively. See "Fiscal 2022 and 2021 Financial Measures—Return on Invested Capital and Adjusted Dividend Payout Ratio" above for additional information.
8 –	Calculated as 2022 adjusted operating income with the add-back for interest on average operating leases multiplied by the 2022 adjusted current income tax rate of 11.9%. Our current income tax rate for 2022 of 15.3% is calculated by dividing our current tax provision by income before income taxes, and has been adjusted as follows:

Current income tax rate (GAAP)			15.3%
MTM retirement plans accounting adjustments			(3.7)%
Business realignment costs			0.5%
FedEx Ground legal matter			(0.4)%
TNT Express integration expenses			0.2%
Adjusted current income tax rate (non-GAAP)			11.9%

	See "Fiscal 2022 and 2021 Financial Measures—Return on Invested Capital and Adjusted Dividend Payout Ratio" above for additional information.

9 –	Other than average adjusted net working capital, amounts are averages of the applicable line items included in FedEx's condensed consolidated balance sheets for the fiscal years ended May 31, 2022 and May 31, 2021, respectively.
10 –	Calculated as our average total current assets for the years ended May 31, 2022 and May 31, 2021, adjusted as follows, minus our average total current liabilities for the years ended May 31, 2022 and May 31, 2021, adjusted as follows:

Dollars in millions
Average total current assets (GAAP)	$	20,473
Average cash and cash equivalents in excess of those required to support daily business operations and those held in restricted offshore accounts		(5,232)
Adjusted average total current assets (non-GAAP)	$	15,241
Average total current liabilities (GAAP)	$	13,967
Average current portion of long-term debt		(114)
Average current portion of operating lease liabilities		(2,326)
Adjusted average total current liabilities (non-GAAP)	$	11,527
Average adjusted net working capital (non-GAAP)	$	3,714

	See "Fiscal 2022 and 2021 Financial Measures—Return on Invested Capital and Adjusted Dividend Payout Ratio" above for additional information.

11 –	Does not sum to total due to rounding.

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FedEx Presents "Deliver Today, Innovate for Tomorrow" Strategy