First quarter results improved primarily due to the execution of the company’s DRIVE program initiatives and continued focus on revenue quality but the improvement in operating results was partially offset by ongoing demand weakness.

FedEx Express operating income increased 18% during the quarter, as a 9% decline in revenue was more than offset by reduced operating expenses.

Cost reductions and transformation efforts that benefited the quarter included structural flight reductions, the alignment of staffing with volume levels, parking aircraft, and shifting to one delivery wave per day in the U.S.

FedEx Ground operating income increased 59% during the quarter primarily due to yield improvement and cost reductions. Cost per package declined more than 2%, driven by lower line-haul expense and improved dock and first- and last-mile productivity.

FedEx Freight operating income decreased 26% during the quarter driven by lower fuel surcharges and shipments, partially offset by base yield improvement. FedEx Freight completed the planned closure of 29 terminal locations during August.

The company completed a $500 million accelerated share repurchase (ASR) transaction during the quarter. A total of 1.95 million shares were delivered under the ASR agreement.

The decrease in outstanding shares benefited first quarter results by $0.02 per diluted share. FedEx expects to repurchase an additional $1.5 billion of common stock during fiscal 2024. Cash on-hand as of August 31, 2023 was $7.1 billion.

Outlook

FedEx is unable to forecast the fiscal 2024 mark-to-market (MTM) retirement plans accounting adjustments. As a result, FedEx is unable to provide a fiscal 2024 earnings per share or effective tax rate (ETR) outlook on a GAAP basis and is relying on the exemption provided by the Securities and Exchange Commission.

It is reasonably possible that the fiscal 2024 MTM retirement plans accounting adjustments could have a material effect on fiscal 2024 consolidated financial results and ETR.

FedEx is revising its forecast for fiscal 2024 and now expects:

• Approximately flat revenue year over year, compared to the prior forecast of flat to low-single-digit-percent revenue growth;
• Earnings per diluted share of $15.10 to $16.60 before the MTM retirement plans accounting adjustments, compared to the prior forecast of $15.00 to $17.00;
• Earnings per diluted share of $17.00 to $18.50 before the MTM retirement plans accounting adjustments after also excluding costs related to business optimization initiatives, compared to the prior forecast of $16.50 to $18.50;
• Permanent cost reductions from the DRIVE transformation program of $1.8 billion;
• ETR of approximately 25% prior to the MTM retirement plans accounting adjustments; and
• Capital spending of $5.7 billion, with a priority on investments to improve efficiency, including fleet and facility modernization, network optimization and automation.

“We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results,” said Raj Subramaniam, FedEx Corp. president and chief executive officer.