FedEx(FDX)2023-02-25 20:11FedEx Corporation Conference Call Summary Company Overview - Company: FedEx Corporation (NYSE: FDX) - Event: Citi 2023 Global Industrial Tech and Mobility Conference - Date: February 21, 2023 - Participants: Raj Subramaniam (President and CEO), Mike Lenz (CFO) Key Points Industry and Company Performance - FedEx achieved pre-pandemic service levels during the peak season, with Ground delivering 31% of total volume early and improving transit times by 2 days compared to the previous year [4][5] - FedEx Express service levels improved by over 4 percentage points for U.S. domestic overnight and global services compared to fiscal 2022 [5] - The company managed to reduce flight hours by 12% during peak season while delivering 13.2 million packages [6] Cost Reduction Initiatives - FedEx accelerated fiscal year 2023 cost actions, increasing the target for cost savings to 4 billion targeted by fiscal year 2025 [4][10] - Organizational changes were made to streamline reporting structures, reducing the officer and director team size by over 10% [7] - The DRIVE program focuses on 14 domains for efficiency improvements, targeting cost savings across FedEx Express, FedEx Ground, and shared overhead expenses [8] Capital Allocation and Financial Goals - FedEx aims to lower capital intensity from 7.2% of revenue to 6.5% or lower by fiscal year 2025 [9] - The fiscal year 2023 capital spend forecast was reduced by 5.9 billion, reflecting a 1.5 billion accelerated share repurchase program was completed, with a target of $2.7 billion in capital return for fiscal year 2023 [10] Future Outlook and Strategic Initiatives - FedEx is committed to a structural transformation to improve profitability and efficiency, with a focus on agility and flexibility in operations [18][31] - The company is exploring opportunities to optimize networks, especially for residential deliveries, in response to the shift in e-commerce dynamics [25] - The new Express U.S. network design aims to enhance efficiency by reorienting the system to accommodate changing traffic profiles [39] Competitive Landscape - FedEx is focused on capturing profitable customer segments, including small and medium businesses, healthcare, and high-value verticals, while differentiating from competitors like Amazon [56] - The company is rationalizing its operations in Europe to improve service levels and capitalize on market opportunities [63] Additional Insights - FedEx is implementing a labor insights platform to better manage staffing levels in alignment with volume demands [27] - The company is addressing volatility in the Express segment by enhancing flexibility and reducing fixed costs [30][32] Conclusion - FedEx is affirming its fiscal 2023 outlook while executing on cost-saving initiatives and strategic transformations aimed at long-term profitability and operational efficiency [11]