FDX

FEDEX CORP

NYSE · INDUSTRIALS · AIR COURIER SERVICES

298.23

−0.53 −0.18%

USD · close Oct 21

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MKT CAP $70.6BP/E —DIV YIELD 1.94%FCF YIELD 7.25%REV TTM $94.7B +7.7%NET INCOME $4.4B +8.3%NET DEBT $10.1B52W 191.92 – 339.35SEC XBRL · TTM TO Invalid Date

How FDX rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

Text kept

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Dropped

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words, now 49,343

New in FY2026

During 2026 and 2025, our primary operating companies were Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc.
For those periods, Federal Express and FedEx Freight represented our major service lines and constituted our reportable segments.
This MD&A is based on our segment reporting that was in effect during 2026 and 2025.
On June 1, 2026, we completed the Spin-Off.
Effective as of this date, we will no longer consolidate FedEx Freight and FedEx Freight is no longer a reportable segment.
Additionally, see “ Results of Operations and Outlook – Consolidated Results – Separation and Other Costs – Business Optimization Costs and – Outlook” and “ Financial Condition – Liquidity Outlook ” below for additional information on efforts we are taking to mitigate adverse trends.
Macroeconomic Conditions While macroeconomic risks apply to most companies, we are particularly vulnerable.
The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to continued weakened business conditions for the transportation industry leading to lower shipment volumes.
Additionally, recent changes in U.S. and international trade policy have further weakened business conditions for the transportation industry.
Inflation and elevated interest rates are negatively affecting consumer and business spending, and we expect inflation and elevated interest rates to continue to negatively affect our results for the remainder of calendar year 2026.
Global Trade Policies The United States government has taken certain actions that have negatively affected United States trade, including imposing tariffs on many goods imported into the United States.
Additionally, many foreign governments have imposed, and others have threatened to impose, new, expanded, or retaliatory tariffs, sanctions, embargoes, and/or quotas or trade barriers on certain goods imported from the United States.
These actions have contributed to weakness in the global economy that has adversely affected our results of operations. -41- On February 20, 2026 the U.S.
Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”).
On February 23, 2026, FedEx filed a lawsuit in the U.S.
Court of International Trade against the U.S.
Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of all IEEPA tariffs paid.
On April 20, 2026, FedEx began filing refund claims through the CBP’s Consolidated Administration and Processing of Entries (“CAPE”) system.
As of May 31, 2026, we have submitted claims totaling $3.3 billion and we have received cash refunds of approximately $800 million.
FedEx recognizes amounts associated with these claims when cash is received or when realization is otherwise considered probable and estimable.
We continue to submit additional refund claims, pursuant to the CBP process, and expect to receive additional refunds as these claims are processed by CBP.
The ultimate amount and timing of refunds remain uncertain due to ongoing administrative processes and potential legal developments.
To the extent customers have previously paid amounts associated with these tariffs, FedEx plans to remit corresponding refunds as soon as practicable.
Accordingly, FedEx has recorded $ 749 million as of May 31, 2026 within current liabilities representing estimated customer refund obligations for cash refunds received.
Certain amounts associated with these tariffs were not collected from customers and were previously written off as credit losses.
Recoveries of such amounts are recognized in the period cash is received or when realization is reasonably assured which is generally when cash is received and are recorded as reductions of bad debt expense.
Additionally, fourteen nationwide class action lawsuits seeking refunds of IEEPA tariffs from FedEx were filed in U.S. district courts in various states.
Thirteen of those lawsuits were consolidated into a single case pending in Tennessee federal court.
The remaining lawsuit is pending in the Court of International Trade.
The financial impact of these events is uncertain, as it is unclear to what extent duties will be refunded by CBP, what processes will govern such refunds in upcoming CAPE phases, or if we can fully collect related accounts receivable.
We are evaluating the impact of these developments on our business and financial statements.
No adjustments have been recorded in the accompanying consolidated financial statements as we cannot reasonably estimate the financial impact; however, it is reasonably possible that it could be material.
MD-11 Operational Impact In November 2025, the U.S.
Federal Aviation Administration issued an emergency Airworthiness Directive to address a potentially unsafe condition on all Boeing MD-11 aircraft, prohibiting further flight until the aircraft are inspected and all corrective actions are performed.
Consequently, we experienced operational disruptions during fiscal 2026 related to the grounding of our MD-11 aircraft fleet which had an adverse impact on our financial results.
In May 2026, following FAA approval of Boeing developed inspection and return-to-service protocols for MD-11 aircraft, we began systematically returning our MD-11 fleet to active commercial service.
We expect our MD-11 fleet to be fully returned to service by the end of calendar year 2026.
In addition, our purchased transportation expense is affected by fuel costs.
During 2026, higher fuel prices positively affected yields through increased fuel surcharges and negatively affected fuel expenses.
To date, we have been mostly successful in mitigating over time the expense effect of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel.

and 676 more.

Gone since FY2025

Our primary operating companies are Federal Express Corporation (“Federal Express”), the world’s largest express transportation company and a leading North American provider of small-package ground delivery services, and FedEx Freight, Inc.
In connection with our one FedEx consolidation plan, on June 1, 2024, FedEx Ground Package System, Inc.
(“FedEx Ground”) and FedEx Corporate Services, Inc ("FedEx Services") were merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network under the respected FedEx brand.
FedEx Freight continues to provide LTL freight transportation services as a separate subsidiary.
Beginning in the first quarter of 2025, Federal Express and FedEx Freight represent our major service lines and constitute our reportable segments.
Additionally, the results of FedEx Custom Critical, Inc.
(“FedEx Custom Critical”) are included in the FedEx Freight segment instead of the Federal Express segment in 2025.
Prior-year amounts were revised to reflect this presentation.
In December 2024, we announced that FedEx’s Board of Directors decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company.
The transaction, which would be implemented through the spin-off of shares of the new company to FedEx stockholders, is expected to be tax-free for U.S. federal income tax purposes for FedEx stockholders and be completed by June 2026.
“Risk Factors – The planned spin-off of FedEx Freight may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the spin-off, if completed, will achieve the intended financial and strategic benefits. ” In January 2025, the Board of Directors approved a change in FedEx's fiscal year end from May 31 to December 31.
The fiscal year change will be effective for the period beginning June 1, 2026.
Additionally, see “Results of Operations and Outlook – Consolidated Results – Business Optimization Costs and – Outlook” and “Financial Condition – Liquidity Outlook” below for additional information on efforts we are taking to mitigate adverse trends. -44- Macroeconomic Conditions While macroeconomic risks apply to most companies, we are particularly vulnerable.
The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to weakened business conditions for the transportation industry.
Consequently, this environment has led to lower shipments at FedEx Freight, negatively affecting our results in 2025.
In the latter half of 2025, the U.S. government began the process of significantly increasing the rates and broadening the scope of tariffs imposed on goods imported into the United States.
In response, several foreign governments imposed new tariffs on certain goods imported from the United States, and additional U.S. and retaliatory measures are possible in 2026.
Additional changes to global trade policies could lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased prices or trade limitations for goods transported globally, potentially reducing customer demand for our services.
Inflation and Interest Rates During 2025, global inflation decelerated year-over-year but continues to be above historical levels.
Additionally, global interest rates remained elevated in an effort to curb inflation.
We are experiencing pressure on demand for our transportation services, particularly our priority services, as elevated inflation and interest rates are negatively affecting consumer and business spending.
We expect inflation and high interest rates to continue to negatively affect our results in 2026.
The timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges can significantly affect our operating results either positively or negatively in the short term.
Lower fuel prices negatively affected yields through lower fuel surcharges at FedEx Freight and reduced fuel expense at both of our transportation segments during 2025.
Geopolitical Conflicts Given the nature of our business and our global operations, geopolitical conflicts may adversely affect our business and results of operations.
While we do not expect ongoing geopolitical conflicts between Russia and Ukraine and in the Middle East, or escalations thereof, to have a direct material impact on our business or results of operations, the broader consequences are adversely affecting the global economy and may also have the effect of heightening other risks disclosed under Item 1A.
“Risk Factors. ” RESULTS OF OPERATIONS AND OUTLOOK Many of our operating expenses are directly affected by revenue and volume levels, and we expect these operating expenses to fluctuate on a year-over-year basis consistent with changes in revenue and volumes.
Therefore, the discussion of operating expense captions focuses on the key drivers and trends affecting expenses other than those factors strictly related to changes in revenue and volumes.
The line item “Other” includes costs associated with outside service contracts (such as information technology services, temporary labor, facility services, and security), insurance, professional fees, and operational supplies.
Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2025 or ended May 31 of the year referenced, and comparisons are to the corresponding period of the prior year. -45- CONSOLIDATED RESULTS The following table compares summary operating results (dollars in millions, except per share amounts) for the years ended May 31: 2025⁽¹⁾ 2024⁽¹⁾ Percent Change Consolidated revenue $ 87,926 $ 87,693 — Operating income (loss): Federal Express segment 4,885 4,819 1 FedEx Freight segment 1,489 1,821 (18) Corporate, other, and eliminations (1,157) (1,081) 7 Consolidated operating income 5,217 5,559 (6) Operating margin: Federal Express segment 6.5 % 6.5 % — bp FedEx Freight segment 16.7 % 19.3 % (260) bp Consolidated operating margin 5.9 % 6.3 % (40) bp Consolidated net income $ 4,092 $ 4,331 (6) Diluted earnings per share $ 16.81 $ 17.21 (2) The following table shows changes in revenue and operating results by reportable segment for 2025 compared to 2024 (in millions): Year-over-Year Changes Revenue Operating Results (1) Federal Express segment $ 641 $ 66 FedEx Freight segment (537) (332) Corporate, other, and eliminations 129 (76) $ 233 $ (342) (1) The following is a summary of the effects of the (costs) benefits of certain items affecting our financial results for the years ended May 31 (in millions): 2025 2024 Items affecting Operating Income: Business optimization costs $ (756) $ (582) Asset impairment charges (21) (157) International regulatory and legacy FedEx Ground legal matters (88) 57 FedEx Freight spin-off costs (38) — $ (903) $ (682) Items affecting Net Income: Mark-to-market (“MTM”) retirement plans accounting adjustments, net of tax $ 390 $ 426 FedEx Freight spin-off costs, net of tax (44) — Remeasurement of state deferred income taxes under one FedEx structure — (54) $ 346 $ 372 Overview Operating income declined in 2025 primarily due to lower shipments and fuel surcharges at FedEx Freight, a continued mix shift toward deferred package services which constrained yield growth, and the expiration of our contract with the U.S.
In addition, operating results for 2025 were negatively affected by increased purchased transportation and wage rates and two fewer operating days at both of our transportation segments.
Partially offsetting these pressures were continued savings related to DRIVE and higher demand for international economy and U.S. ground package services.
Our DRIVE initiatives for 2025 included the continued structural transformation of our network, improving -46- the efficiency of our information technology and back-office functions, optimizing operations in Europe, and increasing linehaul efficiencies.
Operating income in 2025 and 2024 includ es $756 million ($577 million, net of tax, or $2.37 per diluted share) and $582 million ( $444 million , net of tax, or $1.77 per diluted share), respectively, of ex penses associated with our DRIVE business optimization strategy to drive efficiency and lower our overhead and support costs.
Operating income in 2025 and 2024 includes $21 million ($16 million, net of tax, or $0.06 per diluted share) and $157 million ( $120 million , net of tax, or $0.48 per diluted share), respectively, of asset impairment charges associated with the decision to permanently retire certain aircraft and related engines at Federal Express.
Operating income in 2025 includes $88 million of net expenses ($90 million, net of tax, or $0.37 per diluted share) for international regulatory and legacy FedEx Ground legal matters included in Federal Express.
Operating income in 2024 includes a $57 million benefit ($44 million, net of tax, or $0.17 per diluted share) for insurance recoveries in connection with a separate legacy FedEx Ground legal matter included in "Corporate, other, and eliminations." We incurred costs related to the planned spin-off of FedEx Freight of $56 million ($44 million, net of tax, or $0.18 per diluted share) in 2025.
These costs are included in Corporate, other, and eliminations and consist of $38 million of professional and legal fees included in other operating expenses and $18 million related to the debt exchange offer and consent solicitation transactions discussed in Note 7 of the accompanying financial statements included in other, net.
We did not incur any FedEx Freight spin-off costs in 2024.
Net income includes a pre-tax, noncash gain of $515 million in 2025 ($390 million, net of tax, or $1.60 per diluted share) and a gain of $561 million in 2024 ($426 million, net of tax, or $1.69 per diluted share) associated with our MTM retirement plans accounting adjustments.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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