FedEx Corporation (FDX)

F4Q10 (Qtr End 05/31/10) Earnings Call Transcript

June 16, 2010 8:30 am ET


Mickey Foster – VP, IR

Fred Smith – Chairman, President and CEO

Alan Graf – EVP & CFO

Chris Richards – EVP, General Counsel and Secretary

Mike Glenn – President and CEO of FedEx Services

Dave Bronczek – President and CEO of FedEx Express

Bill Logue – President and CEO of FedEx Freight

Dave Rebholz – President and CEO of FedEx Ground


Donald Broughton – Avondale Partners

Helane Becker – Jesup & Lamont

Tom Wadewitz – JP Morgan

Gary Chase – Barclays Capital

John Barnes – RBC Capital Markets

Justin Yagerman – Deutsche Bank

Matthew Brooklier – Piper Jaffray

David Ross – Stifel Nicolaus

Jon Langenfeld – Robert W. Baird

Kevin Sterling – BB&T Capital Markets

Bill Greene – Morgan Stanley

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Chris Ceraso – Credit Suisse

Scott Malat – Goldman Sachs

Edward Wolfe – Wolfe Trahan

Jeff Kauffman – Sterne Agee

David Campbell – Thompson, Davis & Co.



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» FedEx Corp. F4Q09 (Qtr End 05/31/09) Earnings Call Transcript

Good day everyone, and welcome to the FedEx Corporation fourth quarter earnings conference call. Today’s call is being recorded. At this time, I would like to turn the call over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. Please go ahead.

Mickey Foster

Good morning and welcome to FedEx Corporation’s fourth quarter and year-end earnings conference call. I would like to invite you to our Investor Meeting here in Memphis, so please save Tuesday and Wednesday, September 28 and 29, on your calendar. We will have more details about the meeting for you next month.

The fourth quarter earnings release and the 25-page stat book are on our Web site at This call is being broadcast from our web site, and the replay and podcast download will be available for approximately one year.

Joining us on the call today are members of the media. During our question and answer session, callers will be limited to one question and a follow-up so we can accommodate all those who would like to participate.

I want to remind all listeners that FedEx Corporation desires to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act. Certain statements in this conference call may be considered forward-looking statements within the meaning of the Act. Such forward-looking statements are subject to risks, uncertainties, and other factors which 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.

In our earnings release, we will include certain non-GAAP financial measures, which we may discuss on this call. Please refer to the release available on our website for further discussion of these measures and a reconciliation to them – to the most directly comparable GAAP measures. To the extent we disclose any other non-GAAP financial measures on this call, please refer to the investor relations portion of our website at for a reconciliation of such measures for the most directly comparable GAAP measures.

Joining us on the call today are Fred Smith, Chairman, President and CEO; Alan Graf, Executive Vice President and CFO; Chris Richards, Executive Vice President, General Counsel and Secretary; Mike Glenn, President and CEO of FedEx Services; Rob Carter, Executive Vice President, FedEx Information Services and CIO; Dave Bronczek, President and CEO of FedEx Express; Dave Rebholz, President and CEO of FedEx Ground; and Bill Logue, President and CEO of FedEx Freight.

And now our Chairman, Fred Smith, will share his views on the quarter, followed by Alan Graf. After Alan, we will have Q&A.

Fred Smith

Thank you, Mickey. Good morning. Welcome ladies and gentlemen to our discussion of earnings for the fourth quarter and full year, our fiscal year 2010 just ended and our perspective on fiscal year ’11.

We finished FY ‘10 with positive momentum, following gradual economic improvement during quarter three and a strong fourth quarter. Package volume grew significantly as major global economies began emerging from recession in the second half of fiscal year ’10. In addition to being aided by the economic recovery in fiscal year ’10, we were able to successfully navigate the economic downturn for several reasons.

First, the FedEx team was absolutely committed to coming out of this recession stronger and in a better competitive position. We made calculated decisions during the recession so we could leverage our unique global networks to take advantage of the economic recovery we knew would come. Second, we built and maintain an exceptionally strong balance sheet, and third, we plan and execute a business model that puts variable cost programs, what I refer to as our shock absorbers, in place over many years throughout our network so we can quickly and efficiently select up or down to match shipping capacity to demand.

We implemented in this regard several actions in 2009 to lower our cost, including some salary reductions, suspension of 401 (k) company matching contributions, and significant volume related reductions in hours and line-haul expenses. We are very pleased that we have been able to begin restoring some of these pay programs and incentives in calendar year 2010. As we look into fiscal year ’11, a year that began on June 1, we expect stronger demand for our services and continued growth in revenue and earnings as global economic conditions continued to improve.

Our chief economist forecasts FY ‘11 GDP growth will be 3.2% compared to less than 1% in FY ‘10. Industrial production, to which our shipment volume closely correlates, is expected to rise from a negative 3.3% to a positive 5%. We think the restocking process in place will continue in the short-term together with gains in consumption and equipment sales. We believe the improving economy will result in a more stable pricing environment, enhancing our ability to improve yields across all of our transport segments.

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