Good morning, everyone. Thank you for attending FedEx's DRIVE Investor update meeting. Before we begin, please remember to silence your mobile devices. Now, please welcome to the stage Mickey Foster, Vice President, Investor Relations. Good morning, everyone. Welcome to FedEx Corporation's DRIVE Update, and thank you to all of our friends in the financial community for joining us today. Today's meeting is also being streamed live on our investor relations website. I'd like to thank everyone who made the meeting possible today, especially my investor relations team, Steve Hughes, Matt DeBerry, and Robyn Moye. I'd like to remind everyone, since the lawyers asked me to say this, that FedEx Corporation desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act. Certain statements made today, such as projections regarding future performance, may be considered forward-looking statements within the meaning of the Act. Such statements are subject to risk, 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. Please refer to the investor relations portion of our website at fedex.com for information on the non-GAAP financial measures discussed today. I'd like to provide a brief overview of our agenda for today. To begin, Raj Subramaniam will provide an update on how FedEx is transforming its network and structure to drive profitability and increase stockholder value for years to come. Brie Carere will provide an update on our enhancements to the customer experience and our continued commitment to revenue quality and market-leading yields. John Smith will discuss our plans for a fully integrated surface network and our continued improvements to surface efficiency and profitability. Richard Smith and Karen Reddington will discuss the optimization of our air network and our actions to improve international profitability. Mike Lenz will discuss our top initiatives to reset and redesign our G&A structure and our financial outlook. We'll take a short break, followed by a Q&A session with Raj, Mike, and Brie, and Sriram, our Chief Transformation Officer. Following questions and answers, there'll be some brief concluding remarks by Raj and Brad Martin, our Vice Chairman of the Board. Let's get started. We will share a brief introductory video before Raj takes the stage. FedEx Tower, International Express from London bound to Los Angeles, request departure runway 927. Good morning, everybody. It's great to see you all. I'm delighted to welcome you today to our DRIVE Update. Thank you for being here in person in New York City, along with those joining via webcast. FedEx has continuously evolved to meet the changing needs of our customers and the market. This relentless pursuit of improvement is a hallmark of our company and one that has been foundational for our success over the past 50 years. Today, we will show you how we will transform for the next 50 years as we evolve our business to operate with more flexibility, efficiency, and intelligence. I'm very excited to walk you through the plans that we're announcing this morning for One FedEx. Between now and June of 2024, we will be consolidating our operating companies into one unified organization. This is a critical enabler for Network 2.0 and an important step in our DRIVE transformation. DRIVE is indeed the core of our transformation. It is how we execute. I'm confident that the domains within DRIVE will unlock significant stockholder value and that today's presentations will give you a better sense of the cadence, the breadth, and the depth of the evolution that's underway here at FedEx. Taken together, these initiatives we're outlining this morning will improve our long-term operating performance with a focus on operating margin expansion and improved ROIC. Today, we are providing you with a revised long-term financial framework to help demonstrate the benefits of our transformation and the value we'll be creating for our stockholders in the years to come. Our long-term strategy is squarely focused on driving profitable growth and structurally reducing costs. We're improving profitability through targeted growth, going after the higher margin market segments with higher revenue quality. At the same time, what you'll hear a lot more about today, is that we are substantially lowering our cost to serve with sustainably improving capital efficiency. This is all built on a strong foundation of three key things. Number one, digital innovation, which is embedded in our DNA and allows us to better serve our customers with enhanced capabilities. Number two, outstanding customer service, which sets us apart from the competition. Number three, our iconic culture, driven by our people who are the best in the industry. FedEx is where now meets next. As we take action to live out this strategy in a profitable way, it in turn makes us the smart choice for our customers. For our customers, this means offering a differentiated portfolio of offerings, enabling flexible, smarter supply chains that are more sustainable, and providing a better value proposition enabled by our optimized cost structure. The combination will allow us to deliver even greater value to our customers and the most advanced data-driven insights to help them make smarter decisions for their business. This leads me to today's major announcement, One FedEx. As a unified operating company, we will be leaner, more agile, and better positioned to execute on our mission to help customers compete and win with the world's smartest logistics network. One FedEx will leverage the strengths of our networks, people, and assets in more efficient ways. It'll enable a distinct focus on air and international volume while facilitating a more holistic approach to how we move packages on the ground. This is a tremendous milestone for us. With streamlined parcel operations, we will serve our global customers with more flexibility with the right suite of products and services at the right time. We believe now is the right time to reorganize how we work together. This has been an evolution spanning many years as we have meticulously planned for what's next at FedEx. Over the last 50 years, we have built a differentiated and unmatched portfolio of services. Our operating model came with important advantages that positioned us to consistently win share over time, and especially as market trends shifted. For decades, FedEx has led the market in the B2B segment, where our industry knowledge and service are unmatched. Innovations in data and technology have created new opportunities to integrate these networks to be more flexible, efficient, and intelligent. One FedEx is the next step of this journey as we focus on optimizing to realize our full value potential. One FedEx aligns our organization to one corporate structure that'll facilitate an execution of our DRIVE transformation and will further enable the work that's underway in Network 2.0. As a result, we will lower our cost to serve and sustainably improve capital efficiency. It'll also enable tighter coordination across the enterprise. As a unified company with streamlined structure, there will be enhanced visibility into the performance of our network across air and surface, domestic and global, with seamless interoperability. One FedEx will be implemented phases. Phase I will realign our executive officer structure. Effective mid-April, John Smith will assume leadership of all U.S. and Canada surface operations. Richard Smith will continue his leadership of FedEx airline operations and international business. In phase II, planned for June 1, 2024, we will implement a new corporate structure where FedEx Express, FedEx Ground, and FedEx Services will consolidate into One FedEx. Through this reorganization, we'll be able to transform our company with speed and agility. Brings me then to DRIVE, our comprehensive program to support long-term profitability and deliver what's next. DRIVE has the full commitment of our executive team. They're leading with purpose, rigor, and a sense of urgency. Through an extensive bottom-up view of our organization over the last several months, we have established 14 domains that target efficiency improvements. Each is led by an executive sponsor and is aligned around a strategic vision for the business. DRIVE's approach to transforming our business and reducing costs is at a scale unlike anything that we have undertaken before. It has required us to work differently through a more technology-enabled, data-driven approach. We start with the customer, who, after safety, we always put at the forefront of our business decisions and realign our goals with theirs. In today's environment, the digital experience is as critical as the physical experience. We have made significant investments in our surface network to build out our infrastructure and services to meet increased e-commerce demand in North America over the last decade, and especially during the pandemic. Now, we're optimizing these assets, enhancing our capabilities to make our surface network even more efficient. We have great momentum in this regard, as demonstrated by Ground's strong third quarter operating performance. You'll hear more about this shortly. Now turning to our air network, which is one of the most complex and differentiated assets in the world. Through DRIVE, we are optimizing that network by leveraging our strengths, by making it more flexible and agile. You'll hear more about how we are balancing our capacity, strategically leveraging third-party lift to drive efficiency, among other key initiatives. Finally, in G&A, we're making significant changes to how we approach procurement and functional excellence, as well as how we deploy technology so that we are an efficient, digitally- led organization. Digital DNA underpins our entire organization and allows our team members to serve customers even better at a lower cost. DRIVE has gained significant momentum since we launched it at the end of calendar year 2022, and it has identified roughly $4 billion in value and savings in fiscal 2025. On top of that, through DRIVE and One FedEx, we are laying the groundwork for Network 2.0, which will generate $2 billion in value in fiscal 2027. I'm standing here today with members of our leadership team and the board to show you that FedEx is at a pivotal moment in history. There is significant value in FedEx that's being unlocked for shareholders. We're transforming our operating model to be more flexible, efficient, and an intelligent global network. We're moving with urgency and implementing DRIVE with rigor to deliver $4 billion of savings over the next two years, and these savings are starting to materially impact our financial outcomes today. We have significant margin expansion opportunities as we build off a more efficient, lower cost base, and we're delivering this value to our stockholders today as we transform for tomorrow. As you'll hear from Mike Lenz today, we're confident that we will be able to deliver 10% operating margin on a revenue of $100 billion. That represents a significant lowering of the revenue required to deliver double-digit margins related to our prior long-term objective and shows the tremendous potential for value creation from DRIVE. I'm very excited to have the team here today to share more details as we work together to deliver what's next. Of course, we'll start with the customer lens, which informs everything we do. Let me call on stage Brie Carere, our Chief Customer Officer, who will walk you through how we will win with our customers and enable better outcomes through One FedEx. Over to you, Brie. Thank you very much. Thank you, Raj. Good morning, everyone. As Raj just laid out, our strategy is built around the customer. The customer is at the heart of everything that we do at FedEx. Over the last several decades, we have built an unmatched global logistics network, which has enabled us to create long and lasting relationships with our customers. As Raj just shared, we're evolving our network to be more flexible and more agile. It's gonna enable us to create even better service for our customers and drive even better outcomes. We know at FedEx, when our customers win, FedEx wins. With the rise of global e-commerce and the recent global pandemic, supply chains have never been more visible. No one has talked about supply chains more than they have in the last several years, and they've never been more important to our customers and to the market. We have this incredible opportunity to become the world's most efficient, flexible, and intelligent network. I believe we are well on our way to doing that. This is gonna create meaningful differentiation. Differentiation is what drives market-leading yields, which, as you know, we already have. Let's move now to a bit of the market backdrop, which obviously is pretty important context for the conversation today. The addressable e-commerce market is substantial. We believe that it's gonna continue to grow. The economic slowdown. There has been a normalization of e-commerce growth. We have adjusted our forecast down. That being said, by our estimate, e-commerce is going to drive 90% of the parcel market growth. We estimate between 2022 and 2026 that that volume growth will between 4% and 5%. Within e-commerce, there remains significant profitable market share for our ground division and portfolio. We're very excited about that. Within B2B, there of course remains a degree of uncertainty right now. We do expect ultimately B2B is going to return to a more normalized rate of growth. We believe that the next two years will have stronger performance than the previous three. It will be driven by high-value verticals, including automotive and healthcare. Within B2B, we do believe that FedEx is very well-positioned to continue to grow in this market. The bar for service in B2B market is very high. Of course, that is where FedEx excels. Let's talk about DRIVE right now in the commercial domain. Within DRIVE, our commercial domain builds upon our great legacy of fantastic service. We have 4 primary priorities for the commercial domain. The first, very simply, to deliver an outstanding experience. The second, to continue to drive differentiation for our premium segments. The third, we have a great opportunity to increase digitization and personalization within our go-to-market strategy. Finally, I know very near and dear to this team's heart, is continue to drive market-leading yields. Let's start first with the customer experience. As Raj mentioned, we put customers at the forefront of every decision that we make at FedEx. We're not just saying this, we're gonna hold ourselves accountable. My goal, our commitment to you, to our customers, to the market, is to have market-leading net promoter scores and market-leading net service levels. The way that we're gonna do this is by focusing on three areas: visibility, self-service problem resolution, and a delightful recipient experience all the way to the front door. As many of you know, we already have a fantastic visibility portfolio. We've improved our EDD, or our estimated date of delivery. We've also improved our estimated delivery time window, so those last four hours of the shipment. We have made significant improvements in these digital tools, and we're gonna continue to invest in these tools, and we're expanding them across the portfolio and around the globe right now. From a problem resolution perspective, there are rare instances, of course, where customers do have problems, and we are committed to quickly and efficiently addressing those problems for customers. We know that when a customer experiences a problem and you effectively resolve that, you improve customer loyalty, your NPS moves. As you can see on the slide behind me, 70% of our inbound call volume to the service centers around the world are about tracking. If we do a better job with visibility and we do a better job with our digital tools, we're gonna save a lot of money at FedEx as well. Great service and a great win for FedEx. Finally, from a recipient experience, we are continuously improving this. We've been talking a lot about Picture Proof of Delivery. Since we launched last peak, we have had or we have exposed 840 million pictures on residential deliveries. That's a lot of customers who have experienced the market-leading offering from FedEx, and we're gonna continue to expand this capability around the world this year. Let's turn now to our premium market segments. Over the years, we have developed a very deep vertical expertise, and we've got industry-specific capabilities. Let's talk about healthcare. We do a fantastic job. We've got dangerous goods. We have FDA and clearance expertise. We really understand the verticals within our B2B market. The piece that I really want to spend some time on this morning is our market-leading value proposition for small and medium customers. I don't think we talk about this enough, and I don't think we get enough credit, quite frankly, for how differentiated this portfolio is. Let's talk about it. We're faster than our primary competitor because of our weekend and specifically our Sunday deliveries. We have the only loyalty program in the industry. My FedEx Rewards has been creating loyalty for 15 years at FedEx. We have a great earn discount program where the more you ship, the better the discount you get. Small businesses have an opportunity to really influence their pricing. We also have a brand-new FedEx Ship Manager, which is the primary shipping application for small businesses. The customer feedback on this new shipping application on fedex.com has been fantastic. I believe we are very well-positioned to capture more market share from small and medium businesses. Our commercial strategy is really focused on continuing to digitize the entire customer journey. Of course, we will continue to supplement that with our best-in-class sales team and customer service organization. We know in the world of e-commerce, we have significant opportunity to digitize across the chain. If you look at the customer journey behind me here, this fiscal year, we will improve the experience in every one of the boxes behind me. As we think about bringing customers on in a digital fashion, we're implementing new payment options, which is going to reduce friction. As I just mentioned, we are very excited about FedEx Ship Manager. By this peak, 98% of our small customers will be migrated to this new and improved shipping application. That's a very big deal. We're rolling out Picture Proof of Delivery around the world, as I just mentioned. That improves the receiving experience. When you look at the payment and claims, over the past year, we've been piloting a new customer support portal that is dedicated to the shipper. It has received rave reviews, and we're working with Jill's team to expand this to customers around the world. Finally, when we think about the relationship, we've done a lot of work in the past year with our partners at Dataworks building a consumer data platform, and we now can make smarter, more intelligent decisions about whether it's the best decision to make a sales call, to send a text, to send an email, to have a customer service rep engage with a customer. This is going to make us more efficient. It's going to improve our return on investment for our investment dollars, and it will make a better customer experience because it really reflects the customers of today. Bottom line, we are going to improve the customer journey, and Jill and I are committed to reduce our commercial costs as a percentage of revenue. Experience is going to get better and our return on investment. Let's talk now about our market-leading yields. We have achieved strong and stable yield growth over time. FedEx leads in every core segment from a yield perspective. We've got a pro-comprehensive strategy. This past January, we launched a record high GRI, and as I shared on last month's quarterly earnings, we were very pleased with the capture rate that we got on that GRI. We remain focused on surcharge implementation. We continue to manage the packages that require additional operational investment, those packages that incur higher costs, and we're going to price them fairly, but we're going to ensure that we get compensated for the additional operational effort and the impact in our network. We are also expanding our advanced package dimensions and image capture technology. What does that mean? We're going to make sure we get pictures and images of all of our large packages, so we get the price for the dimension and not just the weight. FedEx Ground does an outstanding job of this, but we know we've got a revenue opportunity in our express domestic facilities, and we have a revenue opportunity to get more capture of those dimensions outside of the United States. We're also winning with our freight bundle. As you guys know, we're the only player to be able to bundle parcel and LTL. This helps us attract small businesses who want a holistic solution, and they don't want to have to make lane by lane or different individual decisions. Finally, what I believe is most important for the future of our pricing strategy is that we're going to continue to invest in our dynamic pricing engine with our Dataworks team. We have had some fantastic early wins in this space. I am convinced that there is significant opportunity in the future. As we've talked about, we recently detected overbilling. What does that mean? We could see where we had made a mistake. We could correct an invoice before it got to the customer. We're now able to take that capability. We're going to tweak it. We're going to be able to improve our compliance and our pricing space to make sure that we're getting the revenue as we should. This past peak, we adjusted our holiday peak residential surcharges dynamically. What does that mean? We shifted to the individual customer's weekly peaking factor. That delivered $150 million in profit. We have a very long list of future capabilities, and I would not underestimate the opportunity of using machine learning and AI to continue to do a better job in pricing. In conclusion, I'm gonna end where I started. I believe FedEx commercial capabilities are a powerhouse. Through One FedEx and the initiatives that I've reviewed and the team will share with you today, I am confident that FedEx customers will win in the market. When they win, we win. With that, I'll turn it over to my partner, John Smith. John. Thank you, Brie. Thanks for joining us here today as well as those tuned in into the webcast. I'm excited to spend some time sharing how we're driving efficiencies across the surface operations of FedEx in the U.S. as well as Canada. This includes work already well underway at both FedEx Ground and FedEx Express, as well as work that is beginning in the dry process at Freight. As you know, our ground transformation is focused on optimizing across all elements of operations, which are dock, line haul, and P&D. Additionally, we're making structural changes that maximize asset utilization, as well as leveraging technology to enhance our processes and visibility that will enable continued improvement. These efforts are paying off now and providing great momentum to ground, as demonstrated in our Q3 results. Let's dive in. These are the domains where the surface operations of Ground and Express have always been focused, now with even a more structured approach since launching DRIVE. By executing upon our goals in these areas, we will deliver $1.2 billion in cost savings in FY 2025. Let's talk a little bit about how we're gonna get there. Starting with the foundation of safety above all, at the simplest level, we are focused on reducing safety incidents as well as our accidents. This is through a combination of initiatives focused on vehicle technology, certified training for our service provider drivers, and the rollout of safe operating incentives to keep our people safe and positively impact our liability expense. We also have multiple initiatives aimed at the employee safety in our facilities. These efforts have already driven positive results, including a reduction of workers' compensation cost. Across the board, keeping safety above all will always be our first operational focus, and we will continue to identify opportunities to improve. I'd like to give a few examples of the valuable work underway in each of our key domains. In the surface line haul in our network, we've identified approximately $450 million in overall financial impact with $80 million of that to be FY 2025, specifically from the strategic use of rail as we've outlined on this slide. The rates on the rail are approximately 36% lower than over the road. Our savings will start there. In addition to increasing the volume of ground packages moving on the rail, we will load 90% of that rail volume, which is significantly more than we currently move, onto company-owned intermodal containers. Volume in these containers moves at a lower rate than trailers on flat cars, which is exactly what that sounds like. Semi-trailers on a railroad flat car. The reason being because these multi intermodal containers can be double-stacked. As we strategically leverage these rail opportunities, we are also in the process of enhancing our internal processes and tools to help our field teams successfully plan and execute in this rail space. Let's move inside our buildings. Let's discuss our people and specifically how Ground runs our docks. We've identified approximately $300 million in financial impact for this domain, with $200 million specific to labor efficiency by FY 2025. Key to dock productivity is how quickly can you flex your resources to meet customer demand as well as overall volume, whether that is ramping up for or winding down from peak or just adjusting to market conditions. In this post-COVID environment, as volume has stabilized, we have taken that opportunity to evaluate our labor needs and how best to plan, source, schedule, and optimize our frontline staffing. This begins with machine learning and algorithms that improve the precision of the in-station volume forecast. We use that to build specific operational staffing requirements. We've also continued to enhance our online scheduling tool, ensuring we have the right number of package handlers for each sort. Our focus on labor productivity has taken on a new rigor with improved processes as well as dashboards that give our employees and our management team more in-the-moment visibility and accountability to their efficiency during those sorts. That all adds up to running our docks smarter through new technology and key data insights. With more than 600 facilities running tens of thousands of sorts, it's easy to see improvements, although they may seem simple, when implemented across the network, add up to significant savings. Turning to the road. As you all know, FedEx Ground contracts with more than 6,000 businesses that employ drivers p and deliver packages across the U.S. and Canada. They have the autonomy to run their businesses as they see fit, as long as they meet the terms of their agreement. It is this independence and entrepreneurial spirit behind these businesses that has enabled such success for the FedEx Ground model. You can think, a significant amount of data is generated by these service provider businesses. Data about packages, stops, vehicles, hours, and much, much more. While each business makes its own decisions how to run and optimize its operations, we realized they could make more informed decisions with this data at their fingertips. As part of one of our DRIVE initiatives in the P&D space, FedEx Ground has nearly completed building a tech interface for service providers that will serve up this information. This should give them even greater insights into their businesses and opportunities to optimize, but it's also providing insights to help FedEx Ground reduce the amount of spend on contingency carriers. overall, there are 19 initiatives in the P&D domain, and we anticipate the combination of all these efforts to deliver $150 million in savings by FY 2025. In addition to Ground's DRIVE transformation, I would be remiss if I didn't touch quickly on the work underway from the Express U.S. Ground operations. This team is improving efficiencies in their hubs and network, and this will soon be my responsibility. In total, this is a significant opportunity that, similar to Ground, focuses on improvements in labor productivity, labor planning, reduction of empty miles in the line haul network, as well as improving final mile density. $250 million of that opportunity will be realized in FY 2025 from meaningful actions that structurally reduce our input costs, including sort consolidations and rightsizing capacity across the network. Enhancements in planning processes and technology are an important element of this work because they enable new opportunities to increase asset utilization and reduce our operating expenses. While all these initiatives I've just covered are intended to drive efficiency within each OpCo structure, we can deliver even higher value as One FedEx with a fully interoperable network. That brings me to the discussion on Network 2.0. To me, this is where the rubber truly meets the road. An interoperable network eliminates redundancies in facilities, line haul, and P&D, which will generate an additional $2 billion in recurring savings in FY 2027. You ask how. We will enable one van, one neighborhood. We will eliminate redundant line haul and reduce our overall empty miles. We will capitalize on efficiencies that benefit consolidated sort operations. We will optimize between our air and our surface modes to balance both service and cost. We have started much of this work with Network 2.0. Combined with the shift to One FedEx, this is how we will unlock the immense value across this great enterprise. We're learning a lot with the pilots we've implemented in Network 2.0. With the optimization of our P&D and last mile operations as the critical first piece. If you've ever seen a ground and an express truck in your neighborhood on the same day or watched them pass each other on the street, then you know what we're trying to accomplish. If you add FedEx Freight to this equation, we have an opportunity to optimize the larger shipments that make their way in all three networks. We will have one van, one neighborhood for parcels, and one truck, one service area for freight. This is optimization. Our facility consolidation will also go hand in hand with our transportation optimization efforts. As the final mile interoperability reaches scale, we will be able to streamline the FedEx facility footprint. When we look at line haul, the opportunities across FedEx Express, FedEx Ground, and FedEx Freight to optimize transportation and reduce empty miles is absolutely tremendous. In fact, we project in FY 2023, between all three opcos, we will travel a combined 3.4 mi billion. 3.4 mi billion. To put that in perspective, a trip from Earth to Mars is approximately 34 mi million when Mars is as close to the Earth during its orbit. If you took the line haul miles between Express, Ground, and Freight, that is 100 trips to Mars. 100 trips to Mars. I guess what I'm saying is we wanna make fewer trips to Mars. God, I'm glad I got a laugh out of that. In all seriousness, as I stated earlier, just the opportunity to re-reduce the empty miles in the parcel trailers is substantial across the FedEx surface operations. In finally bringing together the operations, the people, the equipment, the systems across all of FedEx is gonna require a common and a very robust technology platform, which will be delivered by our IT team. As you might imagine, the cost savings associated with eliminating duplicate systems, that is significant within itself. In the simplest form, when you think about Network 2.0, it provides significant opportunity to reduce our structural costs in key areas of our service operations. P&D interoperability, one van, one neighborhood. Facilities, capitalizing on opportunities to consolidate our sort operations. Line haul, eliminating redundant and reducing empty miles. In closing, I am immensely proud of the momentum gained and the value created from DRIVE over these last several months. As we move towards becoming One FedEx, we have a huge opportunity to truly transform this company for what's next. I'm looking forward to leading the ongoing optimization of our service operations. Now with that said, I'll bring up Richard Smith, and thank you very much. Richard. Thank you, John. Just to set the record straight, we have no current plans to expand our business to Mars, nor have I placed any orders for spacecraft yet. Good morning, let me first thank all of you for joining us today and for those listening in too. As we approach our fiftieth anniversary, today truly serves as a milestone moment for us all, reconnecting us to our roots as one unified company. We've only scratched the surface in unlocking the value of our transformation efforts in our air network and our international operations. This is not just an exercise in finding the low-hanging fruit or pushing the limits of our current operating and cost structure. Everything is on the table, I hope you take that away from today, as we use cutting-edge technology and data to reimagine our global network of the future. Across air network and international DRIVE efforts, we're utilizing the power of our airline clearance and global networks to deliver structural improvements that are lowering the cost to serve. We've actioned a set of initiatives across these domains and have already started to realize value with a focus on asset optimization and enhanced network flexibility. We're also going a step beyond to reimagine our global air network, which I'll walk through in more detail in a few moments. All of this is bolstered by the acceleration of our digital capabilities, allowing us to use our networks and our assets far more intelligently. We're on our way to removing $1.3 billion in structural FY 2025 across the air network and our international operations, which includes clearance in Europe. In addition to the efforts above, our Asia, Middle East, and Africa mega region continues as a critical growth engine for FedEx, and we're unlocking further revenue potential and optimization opportunities in EMEA using the same DRIVE rigor and discipline. I have conviction that these combined efforts will yield efficiency improvements at scale even larger than what we've actioned through DRIVE to date. You'll be hearing more from Regional President Karen Reddington as she provides you with updates on our DRIVE efforts to transform the customer experience in Europe while delivering $600 million in cost improvement there. I'll also be diving more into the aggressive work my team is doing to further optimize our Air network and clearance domains, driving $700 million in savings there. Before I go into more detail about what this $700 million encompasses, I also want to speak to the rigor that has been established as part of our DRIVE discipline. We are aligned across the enterprise and working from a single source of metrics and established KPIs to measure progress and success on all these DRIVE initiatives. For the Air network and international, beyond the adjustments matching shifts in volume and demand, we have prioritized structural improvements that, when combined with U.S. Express operations, are already driving global reductions in cost per pound of about 2.5%-3%, and this is just the beginning. Karen and I are also tracking additional metrics, including cost per available ton mile and asset utilization, and I'm confident we will deliver above and beyond what has already been identified to date. Specific to asset utilization, we're accelerating the retirement of our MD-11 fleet by end of fiscal year 2028. We're continuing to park more aircraft, and we are expecting our total year-over-year percentage reduction in flight hours to reach double digits by the end of FY 2023. All of this equates to continued positive reductions in costs related to crew, maintenance, fuel, and other expenses, which I'll discuss in more detail here shortly. I'm excited to now show you how we're going even farther to reimagine the FedEx Global Air Network of the future with a goal of better balancing our Purple Tail, global partner capacity, and surface transport options more efficiently. Having more flexibility in how we move volume means we can improve density and utilize our Purple Tail fleet for what it is intended for, to quickly move high-value, expedited, time-definite shipments around the world. Our reimagined network keeps our airline central to FedEx and will continue to execute on our multiyear fleet modernization strategy, which positions us, by the way, as the youngest and most fuel-efficient fleet in our industry. This flexibility also requires less CapEx, allowing a longer-term reduction in our overall fleet investment, going from $2.3 billion in FY 2022 to $1.5 billion in FY 2025. Put simply, we will reduce our reliance on buying more planes outside of our current commitments while operating a smarter and more efficient airline. To give you a better idea on how this all comes together, let's roll the video. DRIVE enables us to offer unmatched service and reliability by diversifying our air network, more efficiently using our assets, and leaning into an increasingly connected world. Now we have an asset-heavy air network that largely relies on the hub-and-spoke system, regardless of yield profile or service commitment. This system is unmatched and enables us to deliver the Purple Promise to our customers, but at a high cost, especially when demands and volumes shift. Next, by diversifying the global air network with more flexibility across Purple Tail, point-to-point flying, commercial partners, and surface transportation, we will lower the cost to serve by providing more cost-effective options to move volume while still meeting service commitments. By leveraging our commercial partnerships on routes with variances in volume between locations, we create an adaptive network that effectively uses cheaper capacity for lower priority volume, in effect balancing lanes by flying into multiple international gateways while also reducing congestion at hubs. We will also minimize stops through increased point-to-point flying, allowing us to optimize and densify our Purple Tail hub-and-spoke network toward the high-margin, time-sensitive shipments that it is best suited for. Becoming more parcel-centric with our assets allows us to process more volume during time-constrained sort windows and more time to build dense positions with freight for movement in alternative channels. Another cost-effective alternative for non-priority volume relies on increased trucking and flying into regional hubs and commercial gateways to reduce the number of touches and miles a shipment flies. Say you are shipping a package from Paris to Washington, D.C. Today, it would fly twice on its way to destination through a hub sort, regardless of yield or commit time. In our future system, the European and U.S. surface networks will let us consolidate your shipment with others on one international flight to an alternative hub or gateway to avoid congested night sorts. This allows for trucking to your final destination. And we are redesigning our domestic network to be unencumbered by the flying necessitated by certain dayside flying commitments, emphasizing surface-first operations to better handle demands, capture the benefits of our evolved networks, and reduce costs in a scalable manner. As we lean into one interoperable surface network through Network 2.0, interregional and intraregional truck networks will complement existing air capabilities, so we will have more economical and sustainable options to move volume according to service commitment. That deferred package you send across the country from New Hampshire to Washington State may spend less time in the air, saving significant costs at scale. These new network options are enabled by the real-time cross-OPCO data insights through the machine learning and advanced analytics provided by FedEx Dataworks. When connected with the pickup and delivery transformation in the U.S. and optimization efforts in Europe, it creates a now meets next solution that is a win for customers, investors, and the FedEx team. You can clearly see in the video how we're taking the vast connectivity and capacity we've been building over the last 50 years and making it smarter, more efficient, more flexible. Changing the fly, fly model for a lot of this traffic to a much more economical truck, fly, truck model. The perfect team-up of surface and air. Smith brothers for the win. It's also important to note that in the video, these are just a few illustrative examples. When these changes are made at scale across hundreds of flights every day, you can quickly see the value of the transformative efforts and how they add up into real and substantial dollars as we reimagine our global network. All while preserving our value proposition, our service, and our revenue quality. I see Jill watching me on that one, so absolutely top of mind. This is critical and urgent work. We understand that, especially given the size and scope of our airline and our international operations within the FedEx Enterprise. Now as we look more closely at the $700 million of approved and action structural improvements in air network and clearance domains that we'll achieve in FY 2025, we're highlighting ongoing cost reductions largely realized from the improved efficiency in how we move volume, as I detailed to you and the video did a very nice job of. Structural changes in how we set up our flying, including densification of volume on our own aircraft, building out an adaptive layer with our global partner capacity to help balance international lanes, and using more efficient aircraft types all drive savings across fuel and crew costs, as well as better utilization of our assets. On the following slide, I'll walk you through a specific example where these network optimizations come together. We'll continue to emphasize industry best practices, including adjustments to how we taxi our aircraft by using a single engine and optimizing the vertical flight profile on routes to deliver sustainable and cost-effective solutions to control fuel usage and our cost sensitivity to fuel price volatility. Savings in fuel represent over 40% of our pipeline value. Improvements in our scheduling and planning processes unlocked by digital capabilities and reduced flight hours drive further reduction in crew costs. Savings in crew represent roughly 20% of our pipeline value. Our maintenance organization is streamlining its facility footprint and inventory and parts rationalization, which are enabled by ongoing fleet modernization efforts. You'll also learn more shortly about one of these efforts in our upcoming spotlight. Savings in maintenance represent almost 20% of our pipeline value. In clearance, we're optimizing our processes there while continuing to deliver our value proposition in the space, enabling our reimagined air network through cost-effective collaboration with global partners, this accounts for another 15% of our pipeline. Finally, other applicable cost savings, including rentals, landing fees, and purchase transportation, make up the remainder of the pipeline. We'll now turn to a couple of spotlights that show how we're executing this pipeline with specific examples within air network and maintenance. In our first spotlight, we'll talk about how we're structurally reducing transpacific flying by 30% beyond what we have already executed due to volume decline. This is beyond the flexing down commensurate with the softness in volume and the macroeconomic conditions. This is true structural change. Doing this improves our profitability by reducing our operating costs and better balancing our international lanes, as I said, thus increasing the asset efficiency of our Purple Tail assets along the way, or the densification of those with the right type of traffic it was designed for. We're able to achieve this by consolidating and densifying priority volume while increasing our point-to-point connections using global partner capacity for one-way deferred volume. We expect to see around $250 million in structural financial benefit associated with these actions. This is an executed step towards the direction we're taking in the long term to reimagine our global network. As you saw in the video, we'll continue optimizing our Purple Tail fleet and densifying our assets while also setting up and leveraging cost-effective layers of additional air and surface transportation modes for deferred volume. Now in our second spotlight, I'd like to highlight an effort in our maintenance organization. We recently announced the movement of our heavy maintenance hangar in 2024 from LAX to Indianapolis, streamlining those operations in alignment with the ongoing modernization of our fleet. This is enabled by our sunset of the MD-10 fleet, planned retirement of the MD-11 fleet that I spoke to earlier by the end of FY 2028. The expiration of our LAX hangar lease. The maintenance team identified the benefits of consolidating and moving our LAX heavy maintenance work to Indianapolis in 2024. The streamlining of these operations is expected to bring in about $60 million in financial FY 2025. our maintenance organization will continue to support our current and future network needs, maximizing aircraft safety, availability, and reliability, while increasing asset utilization and driving cost effectiveness. How does this all come together? As we look at the life cycle of a package through our domestic and our international networks, our transformation efforts will drive improvement actions across the end-to-end journey from optimized utilization of assets to more flexibility and efficiency in how we move volume around the world. The transformation of our air network complements the changes to surface pickup and delivery networks in the U.S. and Europe, all of which are enabled by improvements in clearance and brokerage services that facilitate the dynamic international trade environment. We're pivoting our capabilities to meet the market, the transformation of our clearance services enhances our value prop, enables the network of the future, and delivers significant value itself towards our DRIVE goals. Our clearance and brokerage services will also improve financial performance internationally. Another key player internationally is, of course, our value proposition in Europe, which DRIVE is helping us to optimize and improve with a focus on delivering a next-generation customer experience. Europe Regional President Karen Reddington is now going to share how we're making progress in this strategic mega region and what comes next for Europe. Thank you. Karen? Good morning, everyone. I am thrilled to be here today to give you some insights into how we're unlocking value across our European networks. The pickup and delivery, and domestic networks across Europe deliver a broad coverage and a competitive proposition for both express and deferred shipments. Our customers have a seamless access to both parcel and freight shipping options across air and road, and that's both within Europe and intercontinentally in and out of Europe. This, of course, allows them to really manage their business with the right solution at the right cost. Our networks are built and successfully integrated, so now we are pivoting towards execution and value creation. I can assure you that the European team's focus is on increasing efficiency and growth across these networks to drive profit improvement. Of course, with the networks of this scale, we have significant opportunity. Our intra-European air network operates more than 750 flights per week. We are continuously flexing our Purple Tail and partner tail networks to optimize to demand profiles, while of course maintaining a competitive edge. On the road, we have an unparalleled network that operates across borders at scale. This network is complex and vast. Working with Dataworks, we have developed tools that deliver insights that speed and simplify decision-making on the fly. This, in turn, is helping to lead to greater service and greater efficiency. With pickup and delivery stations, we have an immense opportunity to ensure that our frontline managers have the tools that enable them to excel at productivity management and at flexing the network to meet the demands of the day. We have a large domestic network in the major European economies. Running these networks at capacity provides the scale necessary to ensure we can lower our unit cost to serve. Your question might be: how exactly are we going to deliver on this and progress towards our goals? We have already identified $600 million in opportunities at a level of detail and specificity that is ready to be executed on, and we will deliver on FY 2025. of course, we're continuing to explore further pipeline opportunities. Let me get into the details. In the air, we have earmarked opportunities through right-sizing and redesigning the network. In fact, we've already launched almost $50 million in annualized savings as of this February. This is through re-gauging parts of the network. The focus here now is on looking for further waves of opportunity. On road, we will deliver savings by using data insights to optimize load plans. We will also segregate parcel and freight across the network to allow us to improve efficiency and loading. We're already using version 1.0 of the tool set and seeing savings due to improved load factor coming in above our forecasts at this pickup and delivery, we are rolling out in-station and on-road optimization capabilities. Now we've already run some proof of concepts which are validating the predicted opportunity. The next phase now is simply to scale up this capability across the European operations. Finally, for the domestic networks, the benefits identified come from a blend of revenue growth and restructuring of the networks. The teams are delivering an excellent service across our domestic operations, and this is pulling in growth powered by sales focus and a targeted incentive program. We are well on track. In closing, we are committed to maintaining service excellence and customer experience and all this while we are delivering and executing upon this $600 million opportunity within the European transformation. With that, it is my pleasure to hand you over to Mike Lenz. Mike. Thanks, Karen, and good morning, everyone. I'll start today by covering our G&A pillar for DRIVE and then close with our new financial framework. One FedEx presents an opportunity that goes beyond network consolidation. We're resetting and redesigning our G&A functions to support our consolidated structure. This means eliminating overlapping activities and organizing ourselves across a single, more efficient entity. This, in turn, allows us to also lower costs by further leveraging our scope and scale across many dimensions. Technology is both a key enabler and opportunity within these efforts. Reduced complexity of our network means we can better streamline the technology that supports it, allowing us to scale and adjust faster. That allows us to invest a portion of the savings in the digital innovations you've heard about earlier. While it's still early innings, the value to realize is significant, and we expect it to accelerate meaningfully in FY 2024. We've identified three focus areas where we can drive significant cost savings: procurement, functional excellence, and technology. These three areas represent approximately $1.5 billion in cost savings through FY 2025, a significant portion of our total DRIVE savings. We expect to make significant progress on procurement and functional excellence savings during FY 2024, with more of the technology savings hitting full stride in FY 2025. We're already gaining traction across these three areas as the team has mobilized with great speed. I'll lead off with how we're driving global sourcing excellence and where we see opportunity of at least $600 million. We're taking a hard look across our spend company-wide and are underway with a comprehensive review of major spend categories to standardize and rationalize policies and specifications. We're taking a more strategic approach to supplier engagement and innovation, as well as leveraging the power of our data and analytics capabilities. Our priorities are to realize improved commercial terms and better manage internal demand. Leveraging the purchasing power of our full enterprise will enable us to reduce third-party spend. One specific area where we're gaining traction today is temporary labor. Here, we're introducing a platform to provide transparency across our global spend and simplify the supply base to leverage our global scale. Today, vendor management decisions are largely made at a local level, but our new sourcing approach will enable us to bring market-specific insights to inform workforce management decisions. We expect our enhanced labor sourcing model to drive about a 20% reduction in temporary labor costs. We're also identifying areas to secure goods and services on more favorable terms to FedEx. For example, we have significant spend on third-party surface line haul transportation, all those trips to Mars John was talking about. With a simplified operating model, we can better leverage our volume across the network, securing critical capacity to meet service while also lowering costs. We're targeting mid to upper single-digit percentage savings in that area. Our realigned structure will give momentum to executing on the global sourcing actions we've identified. Turning to functional excellence. This is really about redesigning our support functions. We're creating a leaner, nimbler leadership structure that is fit for One FedEx and the realities of the market we operate in today. Importantly, this will centralize and accelerate decision-making and accountability. While we have always strategically managed for the holistic FedEx, various parts of the business tailored certain execution aspects for the needs at the time. Key areas of opportunity include configuring our operational planning as well as back-office functions for the broadest scope, ideally globally, depending on the activity. This will allow us to leverage the combined expertise and resources in a holistic, efficient manner with heightened clarity of accountability for outcomes. Common leaders and business practices will facilitate better, faster insights with clear connectivity across functions to accelerate decision-making. We're also streamlining functions supporting the business. For example, we'll have one integrated global shared services organization that efficiently executes transactional activities and offers consistent support to our operations around the world in a model that can scale efficiently. IT is the final domain in our functional G&A DRIVE pillar, and we're investing in critical areas of IT, while at the same time, thanks to One FedEx, identifying opportunities to eliminate duplication. Taken together, these efforts will unlock tremendous value. Bringing FedEx under one operating company means we can evolve our IT estate to support our streamlined operating model. As we discussed with you in June, we had already embarked upon modernizing our foundational IT infrastructure to realize savings. One FedEx presents an opportunity to harmonize and accelerate our efforts to move to common platforms across the enterprise, allowing us to rationalize our application needs. We also expect to realize synergies from aligning hardware and software asset deployment, which will reduce complexity and drive further efficiencies. Beyond core technology improvements, we're transforming our engineering capabilities fit for the emerging technologies of tomorrow. We're expanding our world-class engineering skill bases to deliver cost-effective, cutting-edge capabilities across geographies. We recently announced plans to launch our first advanced capability community in India, which will focus on supporting technology development requirements, advancing digital innovation, while at the same time retaining core FedEx intellectual property and knowledge in-house. This also has the benefit of reducing our dependency on third-party contractors. With DRIVE supporting our transformation, you can expect to see FedEx embracing technology in all aspects of the business. This means driving greater efficiencies across the enterprise, managing our costs better, and providing innovative solutions that benefit the entire organization and allow us to serve our customers better. I'd like to shift to outlining our financial framework going forward. Today, you've heard my colleagues and I discuss the ongoing progress and expected savings from our DRIVE domains, which we expect to total $4 FY 2025. implementation of these savings is well underway. As we look to the next two years, we're anticipating somewhat less than half of the total savings will be realized in FY 2024, with the full FY 2025. the additional $2 billion of savings from Network 2.0 is expected to be realized in FY 2027. Moving forward with FY 2023 drawing to a close, we'll measure our progress versus an FY 2023 baseline. Now turning to our financial framework. Our third quarter earnings call last night, last month, we shared our FY 2023 adjusted EPS outlook of $14.60-$15.20. Embedded in this outlook is an expected revenue range of approximately $90 billion-$92 billion. We expect DRIVE to facilitate a significant profitability improvement from here. Last June, we shared our path to a 10% adjusted operating margin predicated on approximately $105 billion-$110 billion of FY 2025. well, since then, the revenue environment changed dramatically and remains uncertain. What is unknown is how the volume environment will evolve in the next few years. In response, we quickly adapted and heightened our efforts to reduce structural costs across the enterprise and launched our DRIVE initiative. Looking ahead, there are several potential tailwinds that support improving volumes: e-commerce normalization, improved Asia-Pacific trade flows, Europe stabilization, and increased growth in key segments like B2B, healthcare, and small, medium business. At the same time, we continue to navigate a challenging operating environment marked by high inflation, rising interest rates, and geopolitical uncertainty, which all makes revenue more difficult to predict. As a result, we're providing a new financial framework that replaces our June Investor Day objectives through which we believe is the optimal way to think about scenarios in a changed and dynamic operating environment. As we implement our DRIVE initiatives, we are confident that on $100 billion of revenue, we can achieve a 10% operating margin, and we remain committed to driving significant improvement in ROIC, as well as an era of lower capital intensity, targeting CapEx as a percentage of revenue of less than 6.5% medium term. Taken together, this framework supports our continued commitment to rewarding our stockholders as we transform our business, and we are still on our way to delivering a 25% adjusted dividend payout by FY 2025. Importantly here, our transformation via DRIVE is embedding heightened rigor to focus our resources where we can realize the largest and fastest value. As we advance One FedEx, we do not view adjusted operating margin at 10% as our final destination, but a milestone along the way. DRIVE is unlocking opportunities that will benefit us beyond FY 2025. Combined with our implementation of Network 2.0, our continued focus on revenue quality and efficiency gains from all the initiatives you heard today, we see meaningful upside to operating margin over the long term. To close out, a few points to emphasize our commitment to driving improved returns. Back in December, we reduced our fiscal year 2023 capital spend forecast to $5.9 billion, which is approximately a $900 million reduction from initial plans that we started the year with to account for the lower demand environment. In line with this approach, we expect capital spend to be roughly flat in fiscal 2024 versus 2023 and be down as a percentage of revenue. We're continuing to reward our stockholders, announcing today that the board has approved a 10% increase in our fiscal 2024 dividend to $5.04 a share. Additionally, our board has approved including a return on invested capital metric in our FY 2024- FY 2026 long-term incentive compensation program, which further aligns the interest of our stockholders and those of us leading the business. Putting it all together through DRIVE and One FedEx, I'm confident we'll create significant value for stockholders in the years ahead. Now we're gonna take about a 15-minute break before kicking off Q&A. Thank you very much. Okay. We'll start with a question- and- answer session. I think, we're gonna kick off the Q&A, and it'll go about 30-40 minutes. Please limit your questions to FedEx's strategy and content of today's update. For questions regarding near-term trends or performance, we look forward to providing an update on our fourth quarter earnings call in June. When handed the microphone, please state your name and firm before asking your question. Please limit yourself to one question so we can get to many people as possible. With that, calling on the first questioner. There's one gentleman wearing a purple jacket on the first row. That's me. Ken Hoexter. Yes, Ken. Oh, that winds that. Thanks, Mickey. Hi, it's Ken Hoexter from BofA. Maybe just start off just so many different things going on. Raj, maybe talk about how this balances out between Express employees, Ground contractors. How should we think about that balance? It sounded like and adding in Rail, how does that work? Are those contracts set? It sounded like you were talking about Brie, you were talking about bringing down Sunday or adding. You have Sunday deliveries versus competition, yet it seemed like the announcements were talking about getting rid of some Sunday deliveries. Maybe just wrap that all in together on how that balances out. Thanks. firstly, let me just say that from an organization perspective, that's the One FedEx as we're bringing all surface transportation under John Smith. That allows us the opportunity to optimize across the networks and to get ready and facilitate the execution of DRIVE and also ultimately Network 2.0. We see a hybrid model in the future, and we see both contractors and employee model. We'll work through the details as we go along here. As far as Sunday is concerned, we have reduced the scope of Sunday Coverage to about 50% of the U.S. GDP, which is the right optimal level, which gives the differentiation well at the right optimal cost structure. Jack Atkins. Jack. Great. Thank you. It's Jack Atkins from Stephens, thanks for this great event. I guess, you know, the question I've been hearing from investors as we've been preparing for this is: Is FedEx preparing to do more if they need to in terms of cutting costs, taking more costs out of this business if macroeconomic conditions worsen from here? Do you feel like that you have additional levers to pull to support the profitability of the business if revenue levels decline? Well, Jack, thank you for the question. As the economic conditions worsened, we made the determination that we're gonna come out of this stronger than we went in, and that we will focus on the things that we can control. That's what we have been doing. The pace and urgency with which we have executed DRIVE has been just phenomenal. You know, we are, you know, with the reducing our structural costs sets us up for success no matter what the demand environment looks like. You know, we are definitely focused on all the levers we can pull to reduce costs. Thank you, Jack. Scott. Thanks. It's Scott Group from Wolfe. The $4 billion target, I guess, how much have we realized to date? How much is really incremental starting next year? Are there any offsetting headwinds to think about? Is there any way to just, like, clarify how much of that is coming from headcount? Just totally separately, the $600 million from Europe, does that get you to profitability in the segment? If not, what are we doing to get to profitability? All right, Scott. Thanks. I'll take the first part of that there. Think about, you know, keep in mind that, you know, we launched DRIVE at the end of calendar 2022, and DRIVE is a way of working as much as I know it gets framed as, okay, DRIVE's the $4 billion program, but it's really broadly a way of working. That is what has enabled us to make faster traction on the initiatives and the cost reductions that we realized in FY 2023 here, when the demand environment changed radically. While we have been planning and implemented certain of the initiatives that support the structural reductions for the $4 billion, most of that has been coming online here later in 2023. I would just characterize it as, yeah, we got run rate on those going into 2024, but not, you know, a, you know, headline figure that I would put on 2023 specifically in that regard. You ask about Europe. Look, the plans that we outlined there, $600 million is a significant improvement in our European business. You know, we've acknowledged the challenges we've had over the last year or so. Those are behind us, as Karen highlighted there. We've got momentum moving there. We're very pleased with the trajectory and the direction that we're heading in Europe. Tom. Yeah. When I think about the Air Network changes and some of the use of third-party lift, and then I reflect back to a prior meeting you did in 2013, I believe it was, there was some discussion, Dave Bronczek talking about using the Piston Network and third-party lift. It seemed like there was a prior attempt to do some of that. Mm-hmm. I'm wondering, what is it that's different today? You know, what are you gonna do that's different from the prior initiative on kind of using third-party network? Maybe related to that, if you use third party and then slow things down a bit or have more flexibility, you run maybe some risk that you have less growth in premium products and more in economy. How do you manage the risk of cannibalization also, of your best yielding products? Thank you. Tom, thank you for the question. Actually, the answer will actually connect to each other, because as we look at the market environment that's looking ahead, there's a significant amount of deferred traffic and e-commerce traffic in international. Before it was more of an ad hoc kind of thing, but now it's much more a planned and structural because the market environment itself is different. We are able to now plan our network with much more, you know, Meet the service commitments and use a lower cost environment and do it structurally and in a planned manner. Of course, we have the digital and data capabilities that Sriram has produced for us, which we're able to also then able to optimize, which we didn't have before. I think the one thing, just to make sure that it's clear, is we have that business today. We have an opportunity to serve it at a lower cost today with a competitive transit time. I do not see this as dilutive at all. We're gonna develop the Purple system form for the B2B, to Richard's point earlier, the high-value IP, IPFS products in our portfolio. If you go back to 2013, to Richard's point, it really was ad hoc. We were not planning for a larger portion of our air system form to reflect the transit that we were selling, quite frankly, and to avoid the night sorts and to go more direct into not basically Memphis, quite frankly. Yeah. Point to point. I think it is quite different than what we were talking about back in 2015. It's key to, you know, keep in mind that it is an integral element of the overall network planning. When Richard talked about 30% fewer transpacific flights, that is above and beyond the takedown that we just did for volume reductions here. That reflects, you know, the Purple Tail network is servicing the priority high-value, time-critical shipments, and we can flex and use the third-party lift and structure our network to be most efficient to serve both. Okay, there's one analyst with a Purple Promise FedEx pen. Donald. Thank you. Okay, I'm gonna ask the elephant in the room question. How do you, after you integrate the network in the U.S., ensure that the labor continues to be under the Railway Labor Act? You can be rest assured we have taken every consideration into account as we're developing these plans, and our plans are very thorough in this regard. We will. Okay, Chris. Hey, thanks. Chris Wetherbee from Citi. As you think about the network integration and maybe how it impacts the airline fleet going forward, should we expect to see a flat fleet from where we are in a few years, whether it's fiscal 2025 or fiscal 2027? Does it actually come down? Is the curve of growth a little bit lower? Then I guess, as you translate that to free cash flow, and it kind of ties into the CapEx targets that you have there, you know, when you think about that $100 billion of revenue, 10% margin, what's the free cash flow generation of the business at that point, Mike? Again, framing that when we talk about the $4 billion of, you know, structural efficiency cost improvements, you conceptually think of that as saying, "Okay, for the volume we have today, we will fly less to execute on that volume." You know, volume trajectory out over time and that, like, you know, that's, you know, remains uncertain, but that would mean, you know, the efficiencies Richard's talking about there means flying less to execute on that volume today. You know, the MD-11 fleet, we're gonna retire that by the end of FY 2028, which is two years earlier than anticipated. By the end of the fiscal year, we're gonna have roughly 25 airplanes parked. We are working through the fleet plans here and again, also retiring the MD-11s gives... Replacing with 767s gives more flexibility too in terms of making that network more agile and nimble that we're just talking about, that Tom was asking too. Certainly, driving improved margins, lower capital intensity, greater asset utilization is gonna generate improved free cash flow and drive the ROIC. Can I just add one on the aircraft fleet? Not really. The question's already answered, but I wanna just make the point I made really in the third quarter. The planning that we made on the aircraft over time and the modernization program is underway. It's been well thought through, and we had, you know, the fleet now is younger than our competition as we have, you know, modernized our fleet. Now we're at a point saying if we have the demand scenario is looking like this, then we had, you know, we had one scenario where the demand scenario looking like weak demand. The other scenario, that's where the MD-11 as a flex fleet, you know, we were able to pull down. This has been in the works for some time and the thought process, it's not like we just discovered this over time, just in the last minute. This has been a well-conceived plan over some time here. Hey, Brandon. Thank you. Brandon Oglenski from Barclays. Raj and team, congratulations on One FedEx. Thank you, Brandon. ...say for the company. I guess what can you tell us about integration risk? Clearly everyone in this room knows that TNT probably didn't go quite to plan for some reasons outside of your control, but others within your control. What are the risks here from a physical perspective and maybe a technology perspective as well, and how are you gonna mitigate those going forward? Well, I think the key difference here is that we have DRIVE, and the rigor, the work that we have done on DRIVE, is a big deal. One FedEx is an organizational construct that has helped facilitate ultimately to go towards the execution of all the DRIVE programs and ultimately the Network 2.0. We are thinking about this very meticulously, very carefully. You know, I think this will be a good opportunity for me to bring in Sriram to talk about DRIVE a little bit because it's very important that you all understand the rigor, the urgency with which how we are approaching it. Let me bring you in, Sriram, and talk about DRIVE a little bit. Thanks, Raj, thanks for the question. The question you asked about how are we mitigating risks and how are we hedging ourselves to create the best opportunities for success, it's DRIVE. It goes back to the statement that you heard from multiple speakers. It's a different way of working and it's a different way of thinking. If you take the $4 billion of opportunity that was discussed and the $2 billion of Network 2.0 in FY 2027, those are the high-level numbers. If you really break it down, they roll up to more than 450 initiatives. Every initiative has an identified execution path, milestone, financial value, and investment requirement. These initiatives are then summed up into pods that make logical sense, and the pods roll up into the 14 domains that you talked about. The rigor and accountability that we've brought to this process, I mean, let me just let you into a week in my life. Every week, seven domains go through a TO process where we review every initiative, what's the progress on the milestone, what are the delayed milestones, and what are the reasons for those delayed milestones. If it's controllable, if it's a decision on prioritization or reallocation of resources, the same week Friday. This entire leadership team that you heard today meet, make a decision by the end of the day. We move forward. That's created a reinforcing mechanism of execution rigor and success. That's the structure we've established in DRIVE, and that is permeating at a pretty significant scale across the organization in the way we think and work, which is a little bit different from how we used to approach large-scale strategic execution before. That's number one. Number two, you know, there are a few very, very critical KPIs that we've identified as a leadership team, and we monitor it rigorously. What do I mean by that? You heard Brie talk about every execution, every operational execution or commercial execution, we take a step back and look at the impact on our net service level and our net promoter score. We also look at profitability and growth by segment. That's where it starts, the experience we deliver to our customers. The next important priority are the three points that Mike made: take costs out, improve return on invested capital, and drive better margins. Those are the high-level KPIs that we constantly focus on, but it doesn't just stop there. Every single operator has clear definition of KPIs on initiative level, which are many, and we call those Tier 2 KPIs, and they get summed up into core KPIs. Let me walk them through. For the Air network, it's fundamentally cost per available ton mile, and it's cost per pound. That tracks down to cost per pack for Air network, and we track it rigorously across all initiatives that are planned. For Surface, as John laid out, for dock, it's packages per labor hour for dock productivity. For line haul, it's cost per pickup and delivery, it's cost per stop and packs per stop. For GNA, there's various categories of GNA, we measure it as a percentage of revenue or as percentage of overall cost base. This level of rigor is managed and maintained through every single initiative, the 450+ initiatives that roll up to the $4 billion value that the team described. The last point I'd make is we've really helped ourselves by creating cloud-enabled tools which provide a complete line of sight of every single one of these initiatives. How do they roll up into pods? How do they roll up into domains? Raj has a single portal that tells him what's the health of execution of DRIVE. What are the initiatives at risks? What are the pods at risk? What decisions do we need to make to make this change happen and to ensure that we have successful execution? Every single executive sponsor has that kind of visibility in what they're running. It's not just DRIVE meetings, and I'm sure, Richard and John would validate, it's how they run their staff meetings now. It's become a permeation of our culture. To summarize, taking a step back, accountability is the big difference. We've created the governance around that accountability. We've helped ourselves by creating better tools and processes, and we are doing the best we can, to go back to Raj's point, to control all the controllable variables that's in our hand. In fact, you know, as we saw execution barriers and kept bringing back and discussing it as a leadership team, it was one of the important factors to contribute to this announcement of One FedEx. We are making it organizationally and execution-wise, more effective, more easy to create, manage, and execute this process. We're fairly confident that this is going to permeate and this is the way we are going to think and work going forward into the future. Okay, Brian. All right, thank you. Brian Ossenbeck from JP Morgan. Maybe just to quickly follow up on all the KPIs of DRIVE. Will investors see the trends in any of those? How are we gonna monitor this? It sounds like you might have confidence to upside, you know, for these targets at some point. How are we gonna be able to see that? Separately for Brie, if you can just talk about, you know, you mentioned market leading yields but 90% growth from e-commerce. Typically, those don't go hand in hand. You know, I get that you're lowering the cost to serve, but is there an SMB mix? Can you share what target that is? Where it is now maybe to kind of bridge that gap. Thank you. First, Brian, on your first question there, you know, as Sri mentioned, these are specific KPIs that, you know, enforce and then measure the accountability within the initiatives themselves. You know, as we roll up things, of course, we're all looking them across the board. I mean, the headline measures that Sri mentioned are your ultimate judgment of our progress there. Just as we were giving illustrative examples of tangible actions and plans within each of these here, we will report out on our progress as we, you know, we have a history and plan, certainly plan going forward to be very transparent in terms of the extent of our disclosures. At the same time, we are going to balance, you know, competitive considerations too in terms of the degree and granularity of certain metrics and specifics that we, you know, can responsibly put out there. Brie, on e-commerce? Yeah, sure. It's a fair question. I think a couple of things. When we're looking at yield and we're comparing, you know, to our, the market and the competitor, it is versus every product and every core segment. When we look at what we get from an e-commerce perspective, we're getting a higher yield for e-commerce customers. How are we doing that? You know, we've been very deliberate over the last year. When you look at e-commerce, it's a very large market and we are focusing on, and it sounds a little obvious, but you have to focus on the customers that have a higher value SKU. They have to care deeply about their brand and their experience. Our retail customers are very excited about Picture POD. There were some customers who weren't as excited about it. Those aren't the customers for us. When we look at e-commerce, we are going to lean in. It is 90% of the market. It would be foolish not to. It's a very large market, and we are going to be selective about the customers within it that really understand the differentiation and the value that we get. From a small business perspective, we did have a setback last year. I think I've been pretty candid about that. Service wasn't where it needed to be. It is now. It is absolutely competitive, and you take our service levels with that value proposition, I am quite confident that you are gonna see us return to share gains from a small business perspective. Jonathan. Jonathan Chappell from Evercore ISI. Mike, the outcomes DRIVE Network 2.0, the numbers are the same. There was $2.7 billion of kind of variable costs you were taking out in fiscal year 2023 associated with the weaker economic backdrop. You've just laid out a revenue target that's down 5%-10% from what you were speaking of before. Is that $2.7 billion now more structural as we think about the path to $100 billion of revenue and 10% margin? Does that still come back if there's any uplift in the economy and demand? Maybe, Jonathan, to just, you know, part of what I mentioned was we're kind of resetting for FY 2023 to measure going forward. It may be, If you bring up the other slide, maybe this will help illustrate. This is a way to think about, you know, that concept there. Again, as we said, the demand environment remains uncertain. If you take where we are starting, in FY 2023 here, you know, the midpoint of the range I mentioned earlier is about $5.3 billion of op profit there. You know, take modest volume growth over a period of time, call it low single digits. Brie highlighted about yield trends moderating, but still yield over time. You know, the realities are we're certainly in the near term, we're in a higher inflationary environment, and we will continue to confront that. You start with that and say, "Okay, well, here is the value of the DRIVE initiatives," and you put that $4 billion on there. You see the three main areas there that Sri highlighted just a moment ago. That's kind of the stepped staircase there to how to think about that. It's the demand environment is clearly the least clarity, particularly in the near term. At a $100 billion, that is certainly very confident that the combination of achieving that and the implementation of the savings we identified here, that gets us there. I think as you mentioned, Network 2.0, as we move through the DRIVE implementation fully implemented in 2025, Network 2.0 starts to accrue benefits in 2026 and 2027. Jordan. We'll put this on the website, too. Just. Oh, by the way, all the slides- All the slides will be on the, on the website. They're all on the IR website that we presented today. They're there. Jordan Alliger at Goldman Sachs. I think at the Analyst Day back in June of last year, you put a total EBIT margin and revenue number up there, but you also talked about some of the specific segment margin targets. I'm wondering, 'cause you hadn't talked about it today, if there's any update or refresh around that. Thanks. Jordan, with One FedEx, the focus is on the consolidated operating margin and improvement. As the structure changes here, specific opco margins are less meaningful, going forward. It's absolutely the case that we will see profit and margin improvement throughout the surface network initiatives and the air and international that we talked about earlier. It all rolls up there. As One FedEx, specific segment margins in that are not meaningful in that context. David. Hi guys. David Vernon with Bernstein. Thanks for having us. I wanted to ask you to talk a little bit about when the actual physical integration around Network 2.0 is expected to start. I understand you're doing the corporate restructuring this next year to consolidate the segments. When is that gonna start to ramp up? When you get there, I think you put up a 15%-20% efficiency gain in P&D, which is a little bit more than I think you had on your prior slides from the Investor Day. When I think about the consolidated spend of P&D for Express and Ground, that's an awfully big number, and 15%-20% on that would be something, I think, more well in excess of $4 billion. How do I square that 15%-20% productivity gain in P&D when you ultimately get there and timing around when the actual physical integration starts? Thanks. Thank you, David. That's a great question. I'm gonna have John answer that. He's well in the mix on Network 2.0 at this point. All right. Just real quick, you know, going back to the 15%-20%, I'll go back to that example of how many times you've seen an Express and a Ground truck in your neighborhood either stopping at the same house or passing each other in the same neighborhood within, you know, three houses, four houses. We feel really confident about the engineered number that we've come up when we fully integrate. To back up, you know, when you think about Network 2.0. You know, we have built three massive networks over the last 50 years. We have operated until a couple of years ago as independent opcos, right? That's where the opportunity is in Network 2.0, is to unleash the power that's within this enterprise when we go to One FedEx. When we go to One FedEx. That's not gonna happen overnight. However, we're already testing in Alaska and one center up in Minneapolis where we're testing this, where we're taking all of the ground and express freight and combining them and delivering it and picking it up. We have a lot of IT to develop, as I mentioned earlier today, but that's why it will take us to 2027 to really truly get the value of that reoccurring $2 billion by combining these three massive networks. We, you know, it's not like we just came up with this, you know, over the last six months. We've been looking at this for a couple of years. We feel really good about the engineered plan and the Network 2.0 planning within the DRIVE domain, that the timing and the execution of this is very solid. Okay. Ari? Yeah, thank you. Ari Rosa with CS. I wanted to stay on that theme. I wanted to get a little bit more color on when you decided that integrating the networks was the right strategy. Was that in place at the Investor Day last year, or is this a more recent development? Just some context there. Then also, what are your thoughts on the restructuring costs associated with this integration? As the market evolved towards more of e-commerce and, you know, day-definite deliveries on both networks, this gives us the opportunity to optimize. We did talk about it at Investor Day as Network 2.0. The fundamentals have not changed. From what we talked about, the execution elements, we are learning a lot as we move this process. We are preparing the engineering plan, the technology framework that needs to get done. Those things are getting more, you know, more granular as we speak. The idea, we, you know, we had that as John talked about, you know, It's not something that we came up in the last six months. This has been in progression over time, and we did talk about this in this day, Network 2.0. Yeah, I think, you know, keep in mind, you know, One FedEx is a enabler, accelerator of achieving these objectives that we have and the strategies that we've outlined and have been working on for a period of time, as Raj mentioned. Consistent with your other question there, you know, we continue to project that our business optimization costs associated with, you know, DRIVE, which also including Network 2.0, will be less than $2 billion. You know, year-to-date, we're under $200 million cumulative. Again, significant investment relative to, as John talked about there, to, you know, 'cause it has to all hum and work together. You can't just, you know, do a part here and there. That's all part of the plan, program, and discipline that Sri talked about. Okay. Bascome? Bascome Majors, Susquehanna. Can you talk a bit about when we would see a simplified financial reporting structure that reflects the combined parcel operations that you've walked us through today? You know, related to that, you talk about FedEx Freight remaining a standalone operating company. How integrated will that be, and what are the options for that business longer term? Thank you. On the, you know, how we report financial results, well, the second phase, when we get to June 2024, that we're in the planning now of evaluating what that looks like. In the meantime here, for the balance of fiscal 2023 as well as during fiscal 2024, you'll see the same segment reporting in that as we currently present. FedEx Freight is an integral part of our portfolio. You know, both we heard from Brie on the customer synergy side. It's clearly part of the portfolio. Now all reports under John as part of the surface network, and he talked about how much the cost synergies are coming together. This is a competitive advantage for us, both from the revenue side and also from operational side. It's a very, very critical part of our portfolio. Amit? Thanks. Hi, everyone. Deutsche Bank. The $5 billion-$10 billion of adjusted profit improvement, you know, doubling of adjusted profit improvement, any sense of what the slope of that trajectory is? Because, you know, it'd be helpful to just have some markers along the way. Is it, you know, half of that gap being narrowed next year and then the other half in 2025? Is it $2 billion and then the rest in 2025? If you could just provide around color of that. Then I think on Express, not the majority, but 40%-50% of the savings was fuel. Fuel prices are really volatile. Mid-distal demand will increase over the next couple years, I would imagine, as China continues to open up. What do you assume for fuel prices in that number, for the 40%, I think 40%- 45% of fuel savings attributable to fuel? Okay, sure. To the first part, Amit, you know, there's two pieces that you have to think about here in terms of what I highlighted on the screen there. The first is just what is the pace and evolution of the demand environment here, which remains highly uncertain, particularly in the near term, evolving going forward. You know, we're at $90 billion-$92 billion, roughly, for this fiscal year. As that moves along at $100 billion, that's contributes, as illustrated there, and then you pair that with we'll have the full $4 billion realized in FY 2025. It's just the confluence of the timing of that puts it together, but that's to distill it down to the most, you know, simplest way we think about it, in the current context, as well as with what we are aggressively controlling and working on, that's how we get there. Your second question was? On the fuel. Oh, fuel. Yeah. Look, we're not using a peak. We're using. It's a, you know, kind of a reasonable normative assumption about fuel price. You know, obviously surcharge moves in conjunction with fuel price too. You know, we will. That's the financial outcome of it. You know, again, get back to the question about KPIs, we're gonna measure that in gallons of fuel in terms of actually the operational execution and efficiency. I mean, let me just add to that because I was worried that we might take the wrong get the wrong takeaways. Nothing to do with the fuel price. That savings comes from flying less. Yeah. Yeah. That's the key there. Yeah. The, you know, the other part of it we know, which was dynamic surcharges and everything else bound. That particular thing came from flying less, I was worried that people might... I appreciate you raising that question. If you heard Mike on his prepared remarks, he said that the first in 2024, we'll get slightly less than half of the $4 billion. Yeah. Yeah. Thank you. Thanks. Okay, Jeff. Thank you very much. Jeff Kauffman, Vertical Research Partners. Raj, I wanna come back to the question we started a little while ago. Everything I'm hearing is less truck, more rail, less air, more truck. The implication here is we may not need as many aircraft to do the business we do, and I think one of the big criticisms of the company over time is you have a couple hundred more aircraft than everyone you compete with, and aircraft is a lower margin business. What I haven't heard anybody say is, "Yes, we will have fewer aircraft." Back in June last year, the message was less MD-11, less MD-10s, more 767s. We're gonna grow the fleet from 710- 740 aircraft by 2025. Is the implication here that by 2026, 2027, we could be looking at 650 aircraft, 670? I'm not asking you to give me a specific number. Parking planes does not mean lowering the aircraft infrastructure cost. Is the FedEx of the future gonna have materially fewer aircraft, or are we just using our existing aircraft differently? Firstly, I would again go back to the answer that I gave you. You know, we have been thinking through the air fleet modernization very carefully over time. The reason we are able to execute the strategies we're doing today is because how well we have thought through this process. Our fleet. The modernization program is almost nearing completion. If we hadn't done that, we were in a very difficult spot right now. This allows us to think about other things going forward. I want to make that point first, and that there is the foundation that we have laid over the last few years that helps us here. There are most certainly, as we look ahead at the type of demand, that we talked about, the ability to move things on the ground, the ability to move on partner network for deferred traffic. The aircraft intensity as a percentage of our revenue, you know, should be more, we get more efficient as we move forward. Yes. We have time for just one or two more questions, so... Hi. Are we on? Okay, good. Hi, good morning. Stephanie Moore with Jefferies. you know, I wanted to discuss the 10% target operating margin target and the potential variability around the revenue assumptions. I appreciate it's more of a art than a science with some of these targets. In one scenario, if the environment is actually weaker, what are the potential levers that can be pulled to hit that 10% bogey? In the other scenario, if the environment is actually slightly better than expected, could that also be a lift to the margin target, or could a potential additional volume environment actually put strain on the network? How are you kind of balancing those two potential scenarios? Well, The short answer to the second question is absolutely. I mean, this is the whole point of getting the structural costs down. If we get, you know, as the revenue scenario improves, that's significant leverage for this business going forward. Also, there are significant levers we can pull in the current program. I don't know, Sri, I'm gonna go back to you because in the DRIVE program, we have these opportunities that we can look at. So if you want to just highlight a couple of things that we can pull forward. Yeah, absolutely. You know, in terms of execution, the process and structure and rigor that we've created, we've identified certain opportunities, and we have capped them at a certain point because of the demand environment that we've predicted and the availability of resources, for example, the technology resources on how we would execute. If the scenario changes the level of visibility and clarity that we have, we can adjust the pillars and pull forward initiatives which, you know, by reprioritizing resources, reprioritizing execution, we can pull forward resources to mitigate risks as much as we possibly can in the things that we control. Okay. I think that's it for questions- and- answers. We now have Brad Martin is gonna come and make some brief remarks. Thank you very much, everybody. Thank you. Thank you. I didn't see you. On behalf of Fred Smith, our Founder and Chairman, and my colleagues on the board of FedEx Corporation, I wanna close today by thanking each of you for joining us to hear the update from our terrific CEO and his leadership team on the strategies and the execution plans associated with the next 50 years of the amazing fedex. Phase I of the company, or its first 50 years, obviously is one of the most storied business achievements in modern history, but it's also the foundation of a global platform on which phase II of FedEx is being built. Our board has carefully overseen the development of these strategies, the execution plans, and specific milestones associated with our expectations on the DRIVE initiatives outlined today. We are quite confident that phase II, or One FedEx, will again be a period of extraordinary growth and value for our customers, our employees, our shareholders, and our communities. The company was founded 50 years ago on the principles of people, service, and profit. It's widely recognized as one of the most important and admired enterprises in the world. It was also built for speed, and I think you can see today the acceleration of the speed underway at FedEx Corporation, and there's no doubt in my mind that its best days are yet to come. Raj and the leadership team, we stand behind you in this board with great support and energy and commitment to the extraordinary progress that's being made and the terrific days that are ahead. Will you wrap it up for us? Thank you, Brad. I appreciate the support of the board as we move forward into the next phase of FedEx. Thank you, all of you, for being here today. I'm extremely proud of the progress the entire FedEx team has made to get us to the position we are here today. One FedEx will leverage the strengths of our networks, our people, and assets in a much more efficient way. As we harness that power and execute on DRIVE, we will unlock significant value for our stockholders. We will serve our customers better, and we support our people into the future. You heard it repeatedly today: flexibility, efficiency, and intelligence. These are our guiding principles as we move into the next chapter of the FedEx journey. We look forward to keeping you apprised of our progress as we deliver what's next. It was great seeing all of you here today in New York. This concludes our presentation. Thank you very much, and have a wonderful day.