The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 50

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are airlines, transportation equipment, logistics, mail and freight delivery, railroads, shipping, and trucking.

Fortune Sector Leaders: Transportation

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

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The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

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The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-041-FedEx

The parcel delivery giant reported revenue of $93.5 billion (up 11.4%) and profits of $3.8 billion (down 26.9%). Rajesh Subramaniam succeeded founder Frederick Smith as CEO on June 1, 2022. 
<ul> 
 	<li>In February 2023, FedEx cut 10% of global officer and director jobs, a cost-cutting move prompted in part by diminishing revenue from e-commerce.</li> 
 	<li>Subramaniam announced in April 2023 that FedEx would combine its express and ground businesses. Smith had long defended keeping the units separate, even as analysts and investors urged their merger to simplify operations. Subramaniam says the move will help consumers understand pricing and shipping options more easily.</li> 
 	<li>FedEx is the fourth largest employer on the Fortune 500.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

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When it comes to supporting employees, flexibility, diversity, and a few extra paid days off go a long way.

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As one of the largest delivery services companies in the U.S., FedEx has employed thousands of workers on the front lines of the pandemic. To support them, the company debuted a new health care advocate program called Choose Well Care Connect, which provides those workers with a single point of contact whenever they have a health care need, helping them navigate a complex system of vendors. It’s also made 24/7 confidential counseling available to all employees, eligible dependents, and household members, even if they aren’t actively participating in the plan. The company facilitates career advancement through the FedEx Learning Center, which offers over 25,000 online courses; Aspire, which provides hourly employees access to experiential learning, coaching, and development opportunities; and direct tuition assistance for higher education. “I greatly appreciate the mentoring and guidance the managers at FedEx offer to everyone,” says one staffer. “I feel there is a sense of caring from management to their employees.”

Fortune 100 Best Companies to Work For

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Organizations on this annual list positively impact people and communities across multiple countries.

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World’s 25 Best Workplaces

This year’s Fortune 500 marks the 68th running of the list.

F500 2022-FedEx

The delivery services giant climbed six spots to No. 39 on this year’s Fortune 500. Thanks to an increase in e-commerce during the pandemic; the company predicts its deliveries could exceed 100 million a day in calendar 2022. FedEx will experience an epochal change in leadership on June 1, 2022, when founder and CEO Frederick W. Smith will step down after more than 50 years at the helm. Raj Subramaniam will succeed Smith, who remained the largest shareholder in FedEx as of March 2022, with a stake of about 7.3%.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-16-FedEx

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500 135 Fedex

Second only to United Parcel Service in the U.S. package-shipping business, FedEx said COVID-19 affected “virtually all revenue and expense line items” during the final quarter of its latest fiscal year, which ended May 31, 2020, dinging revenues 0.7% to $69.2 billion versus the year prior. Despite the disruption, profits surged an eye-popping 138% to $1.29 billion, nearly rivaling much bigger UPS’s $1.34 billion in profits. The jump is mostly due to earlier costly investments FedEx made to revamp its historically business-centric delivery network so it can better cater to residential customers.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-45-FedEx

Second only to United Parcel Service in the package-shipping business, FedEx inched up two spots to No. 45 on this year’s Fortune 500 list. The company said COVID-19 affected “virtually all revenue and expense line items” during the final quarter of its latest fiscal year, which ended May 31, 2020, dinging revenues 0.7% to $69.2 billion versus the year prior. Despite the disruption, profits surged an eye-popping 138% to $1.29 billion, nearly rivaling much bigger UPS’s $1.34 billion in profits. The jump is mostly due to earlier costly investments FedEx made to revamp its historically business-centric delivery network so it can better cater to residential customers.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-148-FedEx

Second only to United Parcel Service in the package-shipping business, FedEx grew faster than its rival in 2019. The delivery dynamo brought in nearly $69.7 billion in its most recent fiscal year, up 6.5% from FY 2018. Still, FedEx investors despaired over a once marquee customer, Amazon, turning to a competitor. Readying itself for the fight of its life, FedEx spent big sums to revamp its delivery network, known primarily for catering to businesses, to go the “last mile” and drop off boxes on residential doorsteps. Costly investments, in part, caused profits to plummet more than 88%, to $540 million. On a December earnings call, FedEx’s chief financial officer described the hit as “horrific.” But instead of slashing costs, FedEx has swelled its ranks, adding nearly 30,000 more employees over the past year.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-047-FedEx

Second only to United Parcel Service in the package-shipping business, FedEx grew faster than its rival in 2019. The delivery dynamo brought in nearly $69.7 billion in its most recent year fiscal year, up 6.5% from fiscal year 2018—thereby maintaining the No. 47 spot on this year’s list. But FedEx investors despaired over a former marquee customer, Amazon, flipping into a competitor. Readying itself for the fight of its life, FedEx spent big sums to revamp its delivery network, known primarily for catering to businesses, to go the “last mile” and drop off boxes on residential doorsteps. Costly investments, in part, caused profits to plummet 88.2% to $540 million. On a December earnings call, FedEx’s chief financial officer described the hit as “horrific.” But instead of slashing costs, FedEx has swelled its ranks, adding nearly 30,000 more employees over the past year.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

Our 2019 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

Our 2018 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune 500 marks the 64th running of the list.

We surveyed tens of thousands of young employees to create this list of millennials’ favorite workplaces.

best-workplaces-millennials-2018-FedEx

Employees say: 
 
&nbsp; 
 
"It is quite unique how well FedEx takes cares of its employees. I have never worked somewhere where I have been paid so well and been given so many benefits, even as a part-time employee. I feel taken care of and that the company respects what I do." 
 
&nbsp; 
 
"Since I started working for FedEx Freight as a part-time dock worker over four years ago. I have received nothing but great advice, as well as great opportunities to move up. I climbed my way to management with the support of my uppers. The co-workers I have met along the way have been the friendliest with my best interests in mind. I have never worked for a company that I've been so proud of." 
 
&nbsp;

100 Best Large Workplaces for Millennials

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

Our 2017 list of the 100 best companies as ranked by their employees. See which companies made the list.

This year's Fortune 500 marks the 63rd running of the list.

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This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Best Companies

Years on list

U.S. employees

U.S. job openings

Year founded

Perks

100% health coverage

Unlimited sick days

Telecommuting

Job sharing

Subsidized childcare

Compressed work weeks

Fully-paid sabbaticals

On-site fitness/subsidized gym

On-site medical care facility

Non-discrimination policy includes sexual orientation

Sick days for part-timers

College tuition reimbursement

Student loan debt repayment

Paid Time Off: Full-time Employees

# Sick days

Hiring/staffing (past 12 Months)

# of job applicants

Company Info

Industry

Founded

City

Sites

Web Address

Millennials In The Organization

# of millennial employees

Millennials as % of total workforce

Sector

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

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State

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EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

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Total Return to Investors (10 year, annualized)

FedEx, founded in 1971, is a multinational delivery services company known for its overnight shipping and pioneering tracking systems. Headquartered in Memphis, FedEx operates in more than 220 countries and territories, providing an array of services including express transportation, freight, e-commerce, and business solutions.

Q4 2026

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

FedEx (FDX): Company Profile, Stock Price, News, Rankings

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FedEx

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Good afternoon, and welcome to FedEx Corporation's third quarter earnings conference call. The third quarter earnings release, Form 10-Q and stat book are on our website at investors.fedex.com. This call and the accompanying slides are being streamed from our website. During our Q&A session, callers will be limited to one question to allow us to accommodate all those who would like to participate. Certain statements in this conference call may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press releases and filings with the SEC. Today's presentation also includes certain non-GAAP financial measures.

Please refer to investors.fedex.com for a reconciliation of the non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures. Joining us for prepared remarks on the call today are Raj Subramaniam, President and CEO, Brie Carere, Executive Vice President and Chief Customer Officer, and John Dietrich, Executive Vice President and CFO. Now, I'll turn the call over to Raj.

Thank you, Jeni. First, I want to extend a sincere thank you to Team FedEx for delivering very strong results this quarter, supported by an exceptional peak, our most profitable yet. The team's commitment to make every FedEx experience outstanding and their consistent execution drove our strong Q3 financial performance. I also want to express my gratitude to our team members in the Middle East. Their safety and security is our top priority. We are closely monitoring the situation, have implemented contingencies, and are operating in alignment with local authorities as we continue delivering the best possible service to our customers. Our strong Q3 results were largely driven by Federal Express Corporation, or FEC, demonstrating the power and resilience of our global industrial network. As we recently outlined at our Investor Day, the entire FEC organization is aligned in making progress across our four strategic priorities.

Growing in high-margin verticals, transforming our network, and building on our data and technology advantage while delivering ongoing efficiency gains. Our strategy enabled us to deliver sequential and year-over-year adjusted EPS growth for FedEx Corp, ahead of our expectations coming into the quarter. This operational performance, combined with our CapEx discipline, is translating to strong adjusted free cash flow. Additionally, our plans to spin off FedEx Freight on June 1 remain on track. We are confident that the separation will unlock meaningful long-term value for our stockholders. Turning to our consolidated Q3 results. Revenue was up 8% year-over-year, driven by yield and volume strength across nearly all our package services. We delivered a 7% increase in adjusted operating income year-over-year as we successfully managed headwinds tied to changing global trade policies, a challenging LTL demand environment, and the grounding of our MD-11 fleet.

We also effectively overcame significant weather-related service constraints. At FEC, we grew revenue 10% and expanded adjusted operating margin by 50 basis points. This marked our sixth consecutive quarter of margin expansion, allowing us to grow adjusted operating income 18%. This is a clear proof point that our commercial strategy to move up the value chain is working. At the same time, we are executing on our transformation and cost reduction priorities. As anticipated, freight results remain pressured as a result of ongoing LTL industry trends, along with increased separation-related expenses. Importantly, we are laser-focused on revenue quality. As a result, higher rates and revenue per shipment at FedEx Freight helped mitigate lower shipment volumes.

Given the strength of our consolidated Q3 results and updated assumptions for Q4, we are raising our FY 2026 adjusted earnings outlook to $19.30-$20.10 per diluted share. Brie and John will detail the outlook assumptions shortly. Revenue share gains in our priority B2B verticals were an important driver of our Q3 performance. Similar to Q2, nearly half our revenue growth were driven by B2B services, an important enabler of increased profitability. Our transformation to one integrated intelligent network is well underway. By the end of this month, about 35% of eligible volume will flow through nearly 400 Network 2.0 optimized facilities. We remain on track for about 65% of our eligible volume to be flowing through Network 2.0 facilities by next peak.

We continue to expect $2 billion in cumulative savings from Network 2.0 and associated One FedEx initiatives by end of 2027. This was our first peak with meaningful volume flowing through Network 2.0 facilities, and the results speak for themselves. Data-driven solutions continue to support the Network 2.0 rollout and played a crucial role in enhancing service during peak. We recently introduced our unload trailer prioritization tool, which uses real-time data to intelligently sequence yard operations based on trailer content. As Network 2.0 facilities scale, this capability becomes increasingly important, enabling us to better understand a trailer's service mix, especially during morning sorts. This tool supports strong service levels by helping prioritize our most time-critical packages even more efficiently. Internationally, we continue to flex our air network in response to global trade policy changes.

We reduced trans-Pacific outbound purple and white tail capacity by approximately 15% and 25%, respectively, during the quarter. Asia to Europe and intra-Asia, where we are reallocating some of our purple tail capacity, continue to drive strong revenue growth. In a quarter with significant package volume growth, we reduced net capacity, jet fuel usage, and vehicle fuel usage, signaling our success in densifying this network. The team continues to focus on transformation in Europe, where we achieved our 11th consecutive quarter of international revenue share gains. In January, we shared plans to transform our ground operations in France with the goal of improving the experience for our employees, contractors, and customers. As part of this effort, we plan to simplify our domestic footprint, optimize our road network, streamline our value proposition, and leverage digital capabilities to enhance France's competitiveness.

More specifically, we are optimizing the hub and spoke network with fewer, better placed hubs and reducing our overall station count by over 40%. Last month, we also announced our participation in a consortium making an offer for all shares of InPost. As I discussed at our recent Investor Day, high-value B2B verticals are a core priority within our profitable growth strategy. At the same time, our commitment to provide excellent service to consumers around the world remains unchanged. InPost's strong presence and highly profitable track record in Europe's out-of-home delivery segment complements our strategy, allowing us to focus on our core strengths. This transaction is expected to be accretive to our earnings in year one after close, which is targeted for the second half of calendar year 2026.

Upon completion of the transaction, we will enter into commercial agreements that are expected to yield benefits to both parties. Importantly, FedEx and InPost will not integrate operations, and we will remain competitors, each operating in their respective markets and segments. At our Investor Day, we highlighted the role of FedEx Digital Intelligence as our force multiplier, reshaping how we plan, operate, serve customers, and create new services. A great example of new value creation for our Digital Intelligence is our strategic collaboration with Dun & Bradstreet. Together, we'll be launching the Dun & Bradstreet and FedEx Dataworks Retail Momentum Index, an early warning system designed to detect crucial inflection points in U.S. retail supply and demand. Combining vast amounts of shipping intelligence and business data insights, we can provide a near real-time aggregated view of U.S. retail supply and demand.

This intelligence can help business leaders detect inflection points before they appear in traditional economic reports, like monthly retail sales or inventory data. We plan to release this index monthly beginning this spring, marking the start of growing collaboration to develop additional joint insights for the market. Physical AI is another critical element of our longer-term strategy, which will complement and strengthen our extensive and indispensable industrial network. Unloading trailers is one of the most physically demanding tasks in our package operations. Last month, we announced the implementation of a new autonomous robotic system from Berkshire Grey, the Scoop robotic package unloader. This collaboration nicely complements our partnership with Dexterity, which provides robots for trailer loading. Both collaborations are in the pilot phase and expected to be further deployed later this calendar year.

This work signals our commitment to both the safety of our team members and to innovation that improves the efficiency and profitability of our operations. In closing, we delivered a strong quarter while successfully navigating a dynamic environment. We grew in high-margin verticals. We continued to transform our network. We leveraged our data and technology capabilities to enhance execution and value creation. Team FedEx performed exceptionally well, delivering great service for our customers during the critical peak season and beyond. I'm truly grateful for their performance. Now over to you, Brie.

Thank you, Raj. I would like to add my thanks to our team members for delivering another incredible peak season. On a year-over-year basis, we increased volume and improved service during the quarter, all while delivering faster to more locations than the competition. In December, we delivered the best monthly revenue performance in our company history, which of course, supported strong Q3 earnings growth. We served our customers with excellence during this critical period and delivered on our targeted growth strategy, while of course remaining disciplined on pricing. With our team's focus and outstanding execution, we grew FEC revenue 10%, driven by 10% U.S. domestic package revenue growth. This marked our highest quarterly U.S. domestic revenue since fiscal year 2022. International export package revenue also grew a strong 8%. Europe and the Asia to Europe lane stood out as key drivers.

We continued to win profitable share in the global air freight market, delivering 14% growth in international priority and economy freight revenue, supported by our Tricolor strategy. At FedEx Freight, revenue declined 5%, pressured by lower shipments. We are encouraged by our sequential increases in both revenue per shipment and in the attainment of contractual price increases as FedEx Freight prioritizes revenue quality in a challenged LTL market. At FEC, we grew average daily U.S. domestic volume by 5%. Our strategic focus on B2B verticals supported 7% volume growth in U.S. Priority and Deferred Express services. International export volumes inflected positively for the first time in fiscal year 2026, up 2% year-over-year. This is an impressive achievement given the sustained declines on the Transpacific lane due to the dynamic global trade environment.

This international growth is a direct result of our targeted strategy to reroute capacity to our Asia to Europe and Intra-Asia lane, both of which delivered significant revenue growth, along with continued growth in U.S. international outbound and our European region. At FedEx Freight, in line with continued challenging LTL industry trends, shipments declined 6%. With nearly all of the planned dedicated LTL sales force now hired, we are confident Freight is well positioned to grow as the market recovers. Our pricing strategy is driving yield growth. These trends are a direct result of our focus on high-value shipments and industry-leading service, supported by an improving pricing environment. We have seen strong capture rates on the 5.9% general rate increase we implemented in January. We also enhanced our dimensional pricing models both in package and express freight, supported by machine learning tools that improve accuracy.

Additionally, the adjustment to fuel surcharge we put in place in December supported our Q3 results. At FEC, U.S. domestic package yield increased 5%, driven by strength across all services. International export package yield grew 6%, driven by higher weight per shipment tied to the de minimis change, favorable currency, and revenue quality actions. At FedEx Freight, revenue per shipment increased 1%, primarily due to the increased weight per shipment. Regarding fuel, at both FEC and FedEx Freight, we update our fuel surcharges weekly based on the current fuel price. Our U.S. domestic and U.S. export package and freight fuel surcharges are indexed to fuel prices published by the U.S. Department of Energy, allowing us to protect profitability during periods of energy price volatility.

At our Investor Day, we detailed our plans to drive disciplined growth in the segments where our differentiation matters the most to our customers, specifically high-value B2B and specialized B2C. We are encouraged by our Q3 wins and growing sales pipeline across key B2B verticals. Our sales team has done a phenomenal job selling bundled FEC services to our customers, supporting higher win rates and a stronger customer loyalty. Within healthcare, we continue to grow our core transportation revenue along with value-added services. To attract new business in pharma, where we are currently under-penetrated, we are enhancing our offering to serve the specialized, unique needs of our customers with extreme emphasis on quality. Just last week, we onboarded a healthcare-focused vice president of quality who brings deep external experience in global healthcare logistics. This newly created position will help strengthen our global quality governance and harmonize standards across our network.

I am excited about the pace at which our team is introducing new innovations at FedEx. Last month, we announced FedEx Returns Plus, a market-leading AI-powered digital tracking and returns offering for our customers. Our new capabilities enable shippers to simplify the customer experience after checkout, embedding more visibility, communication, and efficiency into the shipper's own digital channels with direct connectivity to our near real-time data. The early market reaction for this U.S. launch has been very positive, and we're excited to expand the offering to Europe this coming April. Shifting now to our revenue outlook for fiscal year 2026 and for the fourth quarter. Factoring in Q3 FEC strength and our expectation that these trends will persist, we now expect a 6%-6.5% consolidated revenue growth this fiscal year compared to our prior 5%-6% growth forecast.

This implies a 6%-7.5% revenue growth in Q4 on a consolidated basis. At FEC, the midpoint of our full-year range now implies approximately 8% revenue growth year-over-year. Q4, we forecast approximately 8% FEC revenue growth at the midpoint, driven by strong U.S. domestic and international yields. As we lean further into our strategy to grow in high-margin verticals, we expect sustained yield growth. We expect U.S. domestic volume growth to continue in Q4. As a reminder, we will be lapping the onboarding of significant healthcare revenue, which creates a difficult comp for our U.S. priority service in Q4. At FedEx Freight, we now expect fiscal year 2026 revenue to be down low single digits year-over-year, with revenue flat to down slightly in Q4 due to the continued LTL industry demand weakness.

We continue to expect Q4 yield growth to provide an offset to a mid-single-digit percentage decline in shipments. In closing, we have a winning commercial strategy, and you are seeing the direct results of this strategy. Our team executed exceptionally well this peak season, delivering for our customers and positioning us for a very strong finish to the fiscal year. Thank you, team FedEx, for your outstanding work. Now I'll turn it over to John.

Thanks, Brie. Our Q3 results highlight our team's commercial execution in delivering premium revenue growth while aggressively managing our costs in a very dynamic environment. We achieved these strong results while also continuing to advance our longer-term transformational and strategic initiatives. On a year-over-year basis, we grew Q3 adjusted operating income by 7% and delivered strong adjusted EPS growth of 16%. I should note that our Q3 adjusted EPS includes a one-time benefit of $0.41 due to a favorable effective tax rate impact of $99 million related to our business restructuring in Brazil. We delivered these results while navigating the impacts of global trade policy changes, demand pressures at FedEx Freight, and the grounding of our MD-11 fleet. This is a true testament to the tireless focus of our team and the resilience of our premier global industrial network.

Now providing more segment detail for Q3 on a year-over-year basis. At FEC, we grew adjusted operating income by $252 million, or 18%. This was driven by both base yield and volume improvement, as well as execution on our cost reduction priorities. Growth in premium revenue in our international export lanes, particularly U.S. outbound and our Asia to Europe lane, contributed to adjusted operating income improvement in the quarter. Yield trended better than expected, which reflects the improving pricing environment both in U.S. domestic and international, and we'll be focused on continuing this momentum in the fourth quarter. With respect to our fleet, Q3 marked the first full quarter with our MD-11 fleet grounded.

My sincere thanks go out to our world-class team, including our pilots, network planning, and flight operations teams, who did an outstanding job adjusting the network under very difficult circumstances to mitigate the operational and financial impacts of the grounding during the peak season. In total, the MD-11 grounding led to a headwind of $120 million of adjusted operating income in the quarter due to higher operating costs and lost revenue. We expect an additional year-over-year headwind in Q4 of up to $55 million as we plan to begin returning these aircraft to service late in the quarter. At FedEx Freight, adjusted operating income declined $127 million year-over-year as industry market softness and demand pressure continued, along with added separation costs related to the Freight spin.

Specifically, we incurred approximately $60 million in separation-related costs that were not adjusted out of our results. These costs were primarily related to hiring and other necessary standalone public company costs that will drive long-term stockholder value creation. However, base yield improvements partially offset these spin and demand headwinds. Turning to our outlook and given our better-than-expected Q3 performance, along with expected and sustained positive trends at FEC, we're increasing our FY 2026 adjusted diluted earnings per share forecast to $19.30-$20.10. This compares to our prior range of $17.80-$19.

The midpoint of our outlook range implies Q4 adjusted EPS of approximately $5.80, which would be our highest quarterly earnings of the year and is directionally consistent with typical trends. However, due to the strength of our peak profitability in Q3, we do not expect as large of a sequential increase in third to fourth quarter earnings as we've seen in recent years. Additionally, the one-time tax benefit in this year's Q3 and Freight's $33 million gain on sale of a facility in last year's Q4 skew sequential comparisons. I'll also note that our revised outlook does not include any incremental share repurchases in Q4. As a result, we expect an EPS headwind from share dilution based on a Q4 common share equivalent assumption of approximately 242 million shares, bringing our FY 2026 expected average to 239 million shares.

In addition, and due to FedEx Freight's recent debt issuance, we also anticipate a headwind in the quarter due to the resulting higher interest costs. In total, this combined impact from higher share count and interest costs represents an approximate $0.10 sequential and year-over-year headwind that we've embedded in our Q4 outlook. In Q4, we'll continue to strategically prioritize high-value revenue growth while continuing to reduce our structural costs, all while advancing our other strategic priorities such as Tricolor and Network 2.0. This will support our expectation for sequential growth in adjusted operating income in Q4. At FEC, we anticipate both sequential and year-over-year growth in adjusted operating income despite year-over-year headwinds from higher variable incentive compensation, global trade policy changes, lapping the onboarding of several high-margin healthcare customers, and continued MD-11 impacts.

We also expect FedEx Freight Q4 revenue to be flat to down slightly and adjusted operating income to be down on a year-over-year basis. This again is due to the LTL market softness conditions and higher separation costs that I referenced. The lapping of the gain on sale I mentioned earlier also results in a tougher Q4 comparison. Turning now to our updated FY 2026 full-year adjusted operating income bridge. This bridge shows the year-over-year elements embedded in our full-year outlook in one midpoint scenario, resulting in adjusted operating income of $6.5 billion, up $300 million versus our prior outlook. In this scenario, FEC volume-related revenue net of variable cost is now expected to be a $600 million tailwind. This is a $100 million improvement compared to what we shared with you in December.

This is driven largely by better U.S. domestic package and international export demand trends. With respect to FEC yield, we now expect a $3.2 billion tailwind. This marks a $200 million improvement compared to what we shared in December and demonstrates our ongoing commitment to revenue quality and improved pricing. For base expense increase, we now assume $1.6 billion in year-over-year general expense increases related to higher wage and purchase transportation rates and other inflationary factors. This is a $500 million improvement versus our December assumption, and we're pleased with our year-to-date cost reduction progress and now expect to exceed this year's $1 billion savings target. Our bridge also includes partial offsets to these items. Most remain unchanged from what we shared in December except for the FedEx Freight and variable incentive compensation headwinds.

Now expect a $400 million decline in adjusted operating income at FedEx Freight compared to the $300 million expectation we shared in December. Additionally, we now expect variable incentive compensation to be an $800 million headwind, reflecting our commitment to rewarding our employees. With regard to the Middle East, our outlook assumes a modest headwind tied to business impact in the region, and we'll continue to monitor the situation. As a reminder, also embedded in our assumptions is the continued revenue and profit headwinds from global trade policy changes, which are more than offset by transformation-related savings. Turning to capital allocation, we're maintaining our disciplined approach to capital and are prioritizing capital toward reinvesting in the business, including Network 2.0 and returning cash to stockholders.

Consistent with this approach, we're now anticipating FY 2026 CapEx to be no more than $4.1 billion, down at least $400 million from the $4.5 billion forecast we provided in December. We also remain committed to bringing aircraft CapEx to $1 billion or below this fiscal year and through 2029. Our CapEx discipline, coupled with the higher adjusted operating income expectation, supports further upside to the FY 2026 adjusted free cash flow assumption of $3.8 billion we previously shared. The adjusted free cash flow potential of our business holds significant value, and we're well on our way and committed to achieving our $6 billion adjusted free cash flow target in 2029 for FedEx Corp, excluding Freight. As we shared at Investor Day, we'll continue to evaluate share repurchases on an opportunistic basis.

We also plan to use share repurchases to offset dilution beyond FY 2026 and maintain our share count to the FY 2026 average count level. In support of our 2029 adjusted EPS target of $25, excluding FedEx Freight. Before turning to Q&A, a quick update on our FedEx Freight separation plan. Raj mentioned our planned June 1, 2026 spin off of FedEx Freight remains on track. FedEx Freight successfully completed a $3.7 billion debt offering in January, and this was an important milestone as Freight intends to dividend the net proceeds to FedEx Corp in connection with the spin off. Given that this is our last earnings call before the spin off, we've invited Freight CEO John Smith and CFO Marshall Witt to join us today to participate in the Q&A.

As a reminder, they'll be holding their FedEx Freight Investor Day on April 8 in New York City. With that, let's open the call up for questions.

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question today is from Ari Rosa with Citigroup. Please go ahead.

Hi, good afternoon. Thank you for taking the question and congrats on a strong result here. Raj, I was hoping you could speak about the impact of the Iran conflict. I understand, you know, obviously we're only a few weeks in here, but just talk to us about how you're adjusting the network and to what extent it's maybe disrupting flows and to what extent it would have a bit of a profit headwind in fiscal fourth quarter. Thanks.

Thank you, Ari. First and foremost, our thoughts and prayers go out to the team members in the region and all those impacted by the conflict. While the situation remains fluid, the safety of our team members always comes first. I have to tell you that our team has done just an absolutely remarkable job of managing our network in very quick fashion to accommodate the conflict zone and moving the traffic around that. At this point, we are assuming that the broader global demand from Q3 continues into Q4. Our first two weeks of March essentially are in line with that trend. The Middle East itself is a relatively small part of our total revenue, you know, so we'll obviously monitor these trends as we go forward. I'll just add on to this.

I know there's a comment, maybe people are thinking about fuel as well. I would just say that fuel is part of our pricing strategy and our net fuel impact, especially at FEC, is expected to be relatively muted for FEC for the fourth quarter. Hopefully that answers your question, Ari.

The next question is from Stephanie Moore with Jefferies. Please go ahead.

Hi, good afternoon. Thank you. Echo that congrats on the good quarter. Since we do have John and team on the line, I wanted to touch on the LTL business a little bit. You clearly called out, John, some investments that we saw during the quarter having an impact on year-over-year profitability, but also noted some pressure in underlying volumes. As you think about your outlook for the fourth quarter and then, you know, maybe a, you know, a 12-month outlook, can you talk a bit about those magnitude and investments we should expect to see? You know, is the, is the fiscal 3Q a level, something that we'd expect going forward? Should we expect to see a step up? Then maybe any commentary on just the overall volume environment as well. Thanks.

Thank you, Stephanie. Let me have Marshall Witt, our CFO for FedEx Freight, to answer that question.

Hey, Stephanie. Thanks for the question. Let me first just talk about the quarter three results and then I'll touch on Q4. As you saw in the re-prepared remarks, our volume and revenue were down mid-single digits. That's not unique to Freight. That's a, you know, it's a broader reflection of the LTL industry itself. As we look at the actual investments that we saw that we're defining or showing as separation costs, we did see some increased separation costs in Q3 and anticipate that to continue in Q4. We look at those as good cost incurrences primarily because they're related to building out our IT infrastructure, which we will need as part of our spin, which is projected to be at six on June 1.

Also building out our talent, and that represents both folks that are coming on board externally and folks that are transitioning over from FedEx Corporation. Having those folks and those platforms being built now and being ready to address the spin off and the standalone of FedEx Freight is a positive outcome for us. Then as regards to your question about the outlook over the next call it 12 months or four quarters and beyond, we plan to speak to that further at Investor Day.

The next question is from Richa Harnain with Deutsche Bank. Please go ahead.

Oh, perfect. Hi, everyone. You know, John, I think you did a really great job, like, comprehensively running down of what's embedded in the outlook. Just big picture, you know, on one hand, given the strong base, and kudos to you on a very good Q3 outcome, you're assuming less of a sequential step up, I think that's clear. On a year-over-year basis, the incremental margin in FCC sort of does come in and as, Raj, you just reminded us you are assuming sort of demand hangs in Q4. Just wanted to better understand the headwinds on Q4. I know it's very early, but looking on fiscal year 2027, you know, Network 2.0 starts to ramp, and you have a ton of momentum underlying your business. Do you think that we could look forward to EPS growth? I know it's early, but wanted to give that one a shot. Thanks.

FedEx (FDX) Q3 2026 Earnings Call Transcript

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