Keep us on schedule here. Try to keep us on schedule today. Mm-hmm. I'm ready when you are. All right. Good afternoon, everyone. Welcome to the first afternoon session. My name is David Vernon. I cover transports and airlines at Bernstein. We are thrilled to have, for the first time in my 10 or 15 years covering the company, FedEx joining us at the SDC. We are in their quiet period, so they have a little bit of restrictions on some of the stuff they can talk about. We are gonna get into some Q&A. I think what we're gonna do here, just so you guys know, you probably know the drill by now. We do have a digital app. If you have questions, put them in there, and I can try to work them in through the iPad, if there are. And then, what we're gonna do is have Jenifer Hollander from IR come up and read a couple of forward-looking disclosures. And then Raj is gonna kick us off with some prepared remarks, and then we'll get into the Q&A. So thanks again for attending the conference. Thanks to FedEx for attending, and I'll hand it to Jenifer. Thanks, David. Certain statements made today, such as projections regarding future performance, may be considered forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press releases and the filings with the SEC. All right. Ready for me? With that, I think we'll let Raj kick us off with some prepared remarks. Okay. Well, thank you, David, and thank you all. This is my first time to be at this conference, and look forward to sharing some comments about FedEx, who we are, how we are transforming, and where we are headed, and then we'll take questions after that. So firstly, I just wanted to talk to you all about the critical role that FedEx plays in expanding global trade and to help build smarter supply chains and delivering products and services to customers around the world. I thought I'll start by giving you all a few stats that illustrates the scale of our operation. We link more than 99% of the world's GDP. We deliver more than 15 million packages every single day. We reach over 220 countries and territories, including every single address in the U.S. We operate more than 5,000 facilities, 700 aircraft, and more than 200,000 vehicles. We have more than 500,000 employees worldwide and generate 1 PB of data every single day. Now, of course, we didn't achieve all of this overnight, and over the course of 51 years is what it's taken us to get here. Our service offerings started in... with just 186 deliveries back in 1973, beginning with our express, our time-definite, business, which is now the world's largest air cargo airline. We expanded into the ground or day-definite parcel business in the late 1990s with our acquisition of Caliber System, which has now become FedEx Ground. And following the acquisition of American Freightways in 2001, we rounded out our offering by establishing FedEx Freight, which is now the country's largest less-than-truckload or LTL carrier. As we have grown these businesses over time, our customers have embraced the bundled offering, with nearly 80% of our U.S. revenue now coming from customers using Express, Ground, and Freight services. The first point I want to really make now is that building networks is a hard and time-consuming work, and it is thanks to these networks. We can pick up a package or a pallet anywhere in the world and get it to any other part of the world in a very short time. People use the word networks all the time, but sometimes they don't really get it. When you use a telephone, you understand what a network is. You can pick up a phone and call anyone. Similarly, when you have a global network, you pick it up from anywhere and deliver it anywhere else. And that is an enormous moat that we have around us that'll be almost impossible to replicate. To try getting a square foot of space in either the Paris Airport or Shanghai or in Delhi or wherever, you know what I'm talking about. And with the unmatched global logistics networks, outstanding customer service, and an iconic culture driven by our people, we have built deep relationships with our customers, and we are extremely proud of the work we do. For example, we continue to deliver vaccines and critical healthcare equipment as we did throughout the pandemic. We transport key manufacturing inputs to keep the supply chains moving, or even ensuring that the Lombardi Trophy makes it to Super Bowl on time. Since the turn of the century, we have grown our revenue at roughly 6% compound annual growth rate. This is true even including the demand volatility we saw during and after the pandemic. With our resilient networks, we managed this unprecedented COVID demand surge when our revenue grew at a roughly 15% compound annual rate for two years. More recently, we have navigated the retraction in demand experienced across our industry. The market has evolved, and we are evolving our business with it. We saw this downturn come early and embarked on a structural cost reduction program. We are ensuring that we are well-positioned to improve profitability, irrespective of the demand environment. We are ready to emerge as an even stronger company when demand influx positively and we return to that normalized growth rate. Through these efforts, we are significantly improving the profitability of the company as we lower our cost to serve, enhance capital efficiency, and better serve our customers with market-leading capabilities. We are in the early innings of our cost reduction efforts, but progress is already evident in our results. This includes margin expansion and earnings improvement over the past three consecutive quarters, despite the declining revenue environment. The entire industry is feeling the revenue pressure, but we are unique in our ability to grow profit even in these market conditions, and this is a clear sign that our efforts are working. Our target is a combined $4 billion in cost reductions in fiscal year 2024. By the way, our fiscal year 2024 ends on Friday, and, and a combined fiscal 2024 and 2025, which begins on Saturday. We are examining every aspect of our cost structure with a focus on our surface network, our air and international network, and G& A. We shared at our Q3 results that we expect to deliver $1.8 billion in savings this fiscal year, and another $2.2 billion in fiscal 2025. When it comes to CapEx, FedEx is at an important inflection point. Our multi-year aircraft fleet modernization strategy positions us well as one of the youngest fleets in the industry. Our capital expenditure continues to decline as a percentage of revenue as we reduce capacity investment and plan for lower annual aircraft CapEx. This enables us to focus on returning cash to stockholders through share buybacks and dividends. Now, let's talk about network transformation. First, let me provide you a little bit of context of how we got here, and more importantly, where we're going. For many years, we ran our businesses with a strategy to compete collectively and operate independently, which served us quite well. For example, 25 years ago, we held a 10% share in the ground parcel market, 10%, with a 70-point market share gap versus our primary competitor. And thanks to our simpler and faster model, paired with a stronger service, we grew market share every quarter for several years, narrowing that gap to about 10 percentage points today, 70 points to 10-point gap. So you may ask the question: Why change? Well, the most meaningful change in the market is the emergence of e-commerce. A vast majority of growth in the parcel market is now driven by e-commerce. A little less than 10 years ago, roughly 75% of the stops, not packages, stops, were businesses. What that means is we have a FedEx Express truck and a FedEx Ground truck pulling up to a business just like this building, perhaps delivering six time-definite packages and 10 day-definite packages. At the same stop, and this approach made business sense because the rest of the network was fully optimized for time-definite and day-definite services, respectively. You fast-forward to today, now, about 75% of our stops, again, not packages, stops, are residential. So you might see a FedEx Express truck drop off a package at your house, followed by a FedEx Ground truck, sometimes delivering another package later in the day. So now you can imagine the room for improved density and efficiency. So that brings me to our transformation and how we're changing the way we run our business to better align with market demand and operate more efficiently. And this is the reason why in April 2023, just over a year ago, we announced a multi-year strategy to unify our businesses and create the world's most flexible and efficient and intelligent network. And one important pillar of that transformation is what we call Network 2.0. It is the network of the future, where we are combining our express and ground networks in U.S. and Canada. And the best way to think of Network 2.0 is one truck, one neighborhood. We spent the past several years updating our technology and facilities to prepare, and we are now in the execution phase. We have already implemented Network 2.0 in over 50 locations, with dozens more to follow this calendar year. As we have stated previously, we're targeting $2 billion in cost savings in FY 2027. Additionally, we are redesigning our global air network. We will improve the efficiency and asset utilization of the entire FedEx system to put the right product and the right network to drive density. Our work here will allow us to use our unique pallet distribution capabilities worldwide to profitably target more of the premium air freight segment. We will do this with a truck-fly-truck model, leveraging existing capacity in our trucking networks to move the international freight shipments. All our revenue growth initiatives, structural cost reductions, and network transformation efforts are managed through a program that we call DRIVE. DRIVE is simply the way we work. It's characterized by rigor and discipline, with a keen focus on business outcomes and very quick decision-making timelines, especially for an organization our size. So now that you have a glimpse of the major change underway at FedEx, let me share a few thoughts on our formula for future success. First, we are focused on return to profitable growth. This is growth in higher margin segments like technology, healthcare, and small and medium businesses. Second, we will continue to drive our structural cost improvements, lowering our cost to serve. We have made considerable progress here, but there is more value to unlock. As I shared previously, we expect to achieve $4 billion in savings in fiscal year 2025, plus an additional $2 billion from Network 2.0 in FY 2027. And third, we leverage the vast amount of data we access from the 15 million packages we deliver each day. We will create data-driven solutions that bring internal efficiencies and enable us to better serve our customers. These solutions will be built with a platform mindset of reusability and scalability, with a mission to make supply chains smarter for everyone. Just think about this: Prior to the pandemic, if I hadn't mentioned the word supply chain, I probably would have been politely escorted out of the room. It was the purview of procurement managers, perhaps a CFO. But ever since the pandemic, supply chains have now risen to board-level conversations, and you will hear it even in talk shows these days. So this is the right time for us to make our mission to be, to now become, make supply chains smarter for everyone. We're already obviously a leading supply chain company with an unmatched global physical network. We move more than $2 trillion worth of goods every year, and we sit in the middle of an immensely powerful data ecosystem. Leveraging our physical network and our digital platform, we are on our way to becoming a leading supply chain technology company as well. So these three long-term strategic priorities are interconnected and create even more value when they are all moving together. I hope that you will take away from today's conversation my conviction that there's enormous opportunity ahead of, at FedEx, as we transform how we operate while continuing to offer our customers unmatched speed and service. Thank you for your attention here, and look forward to the Q&A. Thank you, David. All right. Thank you very much for the overview, Raj. So, I want to kind of structure our discussion in a couple of different areas. First, talking a little bit about some bigger market trends- Yeah. that you might be able to help shed light on for investors. Talk about some of the sector themes that are important, and then maybe dig into some of the cost reduction plans- Sure. restructuring that you got underway. Okay. So starting in the area of, these sort of big picture themes. You mentioned, you know, supply chain being at the forefront of many companies' minds, and it does feel like we're now in a world where there's always a supply chain crisis somewhere. How is FedEx positioned in the marketplace to capitalize on that or, uniquely, benefit from the increasing volatility that seems to be the affecting the global supply chain? Yeah. So 100%, agree with you that supply chain has now suddenly risen to the top of the list on several people's agendas. And, if you go back in history, and especially in the last 35 years that I've been in working at FedEx, that the supply chain perturbations have been rather muted. Even in, like, you know, the oil crisis or even in the 2008 financial crisis and so on and so forth. This is because of the physical systems like ours and the improvements in technology. So the perturbations were... Of course, there were, but they were minimal. What we are now seeing, the pandemic, is one giant change. And, and so the supply chain bullwhip effect that we are seeing right now. So from a FedEx perspective, you know, we've, you know, if you go back, like, if you like Rip Van Winkle and went to sleep in 2020 and woke up today, we grew roughly 6% CAGR in the last 4 years. It's comparable to the last 25 years, except the fact that there was a huge spike for 2 years and then a modest decline in the last year. So, I think, this is a unique period in the last 35 years, and so that's why, you know, you see so much... There's not multiple things happening. It's part of the same- you know, still reverberating from the, and the historic, pandemic, issue. So from a FedEx point of view, we get to see the signals early, and we're able to move faster. Our mission to make supply chains smarter for everyone has come in from this idea, that we simply have the data, and more importantly, the insights about the global supply chain every single day, especially the high-value goods of the economy. So today's supply chain trends are different than tomorrow's, and the afternoon is changing. And so, you know, we are watching it very carefully. We're making sure that, you know, we use information to make sure our networks are very efficient. But we're also integrating with our customers to make sure that their supply chains are efficient. And in the age of e-commerce, make sure that the end consumer gets the value by getting increased predictability and reliability. So that's how we are doing. Our physical and digital networks are now working together to make that happen. Is it fair to say that volatility is actually helping from a revenue growth standpoint in terms of the demand angle, or is it more episodic? The volatility as you think about the last four years, I mean, that's where, you know, we are in a way, you know, two years of real steep increase in the demand and then two years of slight decline. I think, you know, we are all, you know, sitting as an industry now, when that bottoms out, then I think we will still get back into a more normalized environment. Because again, if you think back about the e-commerce as a penetration the retail, you know, it spiked, came back. You know, so a lot of things have, you know, really come back to the original trend, except for interest rates and inflation. Right. And one of the other sort of supply chain mega trends we've talked a lot about- Mm-hmm. Frankly, a lot of ink has been spilled on Yeah. is this issue of nearshoring. Yes. And I wanna ask the question to you in two ways around nearshoring. Number one, you know, are you seeing those shifts in sourcing, and are they tangible enough to actually impact your business? Yes. The supply chain patterns are fundamentally changing, and we can see it. The, you know, when it's not just people talk about, you know, a diversification into new markets. It's not just that. It's like a lot of the intermediate products were built in different countries. They made their way to China, for example, assembled and then went to the final consumption point of U.S. and Europe. That pattern is now changing, and, you know, we can see different things are happening in that. So it is not only that new countries are coming into play, it is the patterns of how goods are produced are changing. The good news for FedEx is that we see it from the bottom up, because as practitioners in this business, when a manufacturer wants to change any kind of thing in their supply chain, they need to make sure that the logistics is taken care of. So we hear about it first. And so, the good news from FedEx point of view here again, is that because of the network that we already have in place, you know, nearly every single time that where they wanna move, we're already there. And so it's just a matter of, you know, just connecting to that point. Even if it was a new point, it's a matter of connecting that point to the nearest node, and boom, the whole network is connected. So we are, you know, we have an inherent advantage in that sense, that we already have a network in place. Now, specifically, Mexico is an area where things are moving towards. You can see it in Vietnam, you can see in Southeast Asia, you can see in India. And, you know, we'll see how these trends play out, but we see it, like I said, in the bottom up, and we move fast, and manufacturing can move, for sure. So if you think about Mexico becoming more important than China, sort of at the margin- Mm. -Does that pose a unique risk to you guys in terms of? No, no, not at all. ... the air cargo network? 'Cause you probably don't need a plane to get- No, but we have. You know, I just was there in Mexico. Actually, we have a fantastic way, which advantage FedEx in that sense, because if you think about the presence we have in Mexico and the ground-based networks that we have in the United States, and you put the two together, we actually have, you know, in a very unique situation there. Sure. Because, you know, or if you look at our competition, they're not, you know, that big in Mexico. If you look at DHL, they're not that big in the United States. And so it's, you know, we are actually in a catbird seat in that perspective, and we have all the ground-based distribution models that we have in the US. So no, I think we... That actually, it doesn't—like I said, it doesn't matter where it moves, we're already there. Does it create a challenge around the air assets? No, we, you know, we will, we'll size our air assets depending upon traffic. I think we, today, you know, Asia represents, I don't know, 40% of global air backstream, and I don't-- I'd see that go down maybe a little bit, but, you know. So it's, we, we'll manage overall capacity, based on the demand environment. That's not, that's not a problem. Okay. And then if we were to talk a little bit about some of the sector themes, obviously the growth of e-commerce. You talked about the moat and the climate, and it's something that, that- Yeah ... we think we understand pretty well. But when talking to investors, we hear a lot about this idea that, hey, what moat? Amazon just stood up a network with more trucks than FedEx Ground has. How is it... What moat are you talking about? Well, when you talk about a moat, it, the business itself is fundamentally different, you know, because it's pick up, sort, and deliver, not just deliver. So if you look in our FedEx facility, you know, packages come in and out. It moves through it in minutes. When you look at a comparable e-tailer facility, they go in there for days and weeks. It's a different business, different moat. And so that's not a, not even a comparable thing. So this idea of a network, that's why specifics, they said a network. Network is you have to pick up and deliver. Mm-hmm. That's what we uniquely have. And so there is a significant moat. The other part is that if you look at a FedEx truck delivering, moving on the road, there's packages from all over the world. The revenue on that truck is significantly higher than just what you can pick up from a local delivery. So there is significant scale advantages that we have. Of course, we had to adapt our network just the e-commerce growth, which is what we are doing right now, and which we have done. No, we are actually very, you know... We have done a pretty good job of adapting to the changes, but I think with the more to come, and the technology also plays a significantly critical role as we move forward. For e-commerce, it's ultimately a good thing for FedEx. Do you think it's fair to say that the growth of e-commerce has brought margin pressure for the industry? Well, you know, from the get-go, yes. But if you now look at what we have done with FedEx Ground, and even literally in the last 3, 4 years, you can see the margins continue to expand. So it's even with this significant e-commerce, it's just that our networks are now adapted to this new environment. And we are, there are, you know, people talk about the last mile, but they forget about the first few thousand miles, you know, and there are only very, very few people, very few companies who can deliver and move. But if you just kind of think about the diagnosis of some of the problems beforehand, obviously we're coping and we're adapting, but there was some margin pressure there from e-commerce. It looks like in the data. If you look in, as I said, there was a period of adapting to this. Yeah ... but I think now we're, you know, you know, we've moved on from... So these things have changed, and, you know, we have, we had to put some, you know, specific infrastructure to support e-commerce quite some time. That's all in there now. So what about price? Mm-hmm. And the challenges you have around the residential delivery part of the business, just being, in general, less productive than. No, I think, you know, I'm really proud of the way that we have managed our revenue management, you know, function. And this is something that's differentiated in the market for us. We look at this very, very carefully. And, you know, and if you look, close your eyes, pick up any quarter, then in the last 20 years, pick one. Open and compare our yields versus our competition, we'll be better. And it's just, we've done a much, much better job of managing—'cause the value that we provide for our customers is significant, and we will, you know, we will provide, because of that, we can, you know, we need to balance out the needs of our customers and shareholders and our employees, and we do that very carefully. You know, again, we have done a really remarkable job on the revenue management side. Before we kind of dig deeper into the pricing question, I wanted to follow up on one of the things you mentioned before, some of the investments that you needed to make. What did you need to do to adapt that now? Yeah, that's a great question. To make it- Yeah. So, you know, when we had to put in what we call regional sort facilities, for example, in FedEx Ground. So then we're able to pause in and out of that facility to some of the local markets, because the demand for E-commerce, that's all in place now. The regional sorts meaning like the RSF facilities? Well, we own [inaudible Yeah. into these what we call RSFs, and we set them up during the pandemic. And they served us very well in terms of moving, especially the e-commerce goods, which, you know, bypassed the major hubs through RSFs and into the customers' hands. So basically, routing some of that higher volume residential stuff around the commercial. Yes. Okay, interesting. So if you think about, you know, again, back to that comment on whether the moat has been breached, right? Obviously, it does feel like it, with Amazon controlling its, you know, own supply chain with just the delivery component, the inventory space, that's growing faster than the market. Mm-hmm. How do you think about the rest of that market growth opportunity? Yeah, I think, very good question. So I mean, the point here is that the e-commerce market, I think, you know, I suspect Amazon's about 40%-50% of the market. Now we are partnered with all the retailers. I can name on every one of them, you know, we have a partnership with them, and we are their, you know, transportation, logistics arm in their growth of e-commerce. If you look at their growth of e-commerce of some of these big retailers, they're also growing very fast. And we are now linked. It's one of the best relationships we have, is we are linked at the data level and at the technological level, right behind, you know, at the, at point of order and order by the end customer. We're able to get that information into FedEx's hands, you know, 12 hours before we normally go out, which is a lifetime for FedEx. But most importantly, we're able to then let our customers know how, you know, how best to optimize their supply chains, given the latest in weather, traffic conditions, and so on. And we are also able to get the end consumer significantly more visibility. So we are now, you know, really strategically hooked up with many of the retailers who enable their E-commerce, which is 60% of the market, and that's also growing, you know. So there is a significant balancing act that's happening. Okay. And when you think about the going back to the revenue management side of the equation, right? You mentioned you're really proud of the way the team has sort of- Yeah helped to adapt and respond. Yep. You know, how has the growth of e-commerce created challenges for you on that pricing front? Because it does seem like, you know, there is some perception out there that delivery is free, and it's harder to get freight in that market, and maybe Amazon's having an impact, because now they're offering some excess capacity in some markets. No, I think, you know, you're talking about 15 million packages per day that go through the system. And, you know, I think we have, you know, the value that we provide our retailers is very, very clear. And, so we have, you know, very productive conversations. I mean, you know, for example, Peak, you know, we now have the Peak Surcharges, and, that that's basically changed the industry, how we deal with Peak, for example. So I think we have, the overall, the idea there's a significant piece of the market that we play in, in E-commerce, it is growing, and we now have a very efficient system to deliver it. We have a good revenue management philosophy, good pricing mechanisms to deliver value for our stakeholders. I think we're in a good place here, and especially as the industrial market, you know, comes back to some kind of equilibrium, I think we'll be in shape. Let's, let's kind of dig into that for a second, the industrial part of the economy b ecause a lot of time investors focus is solely, surely on e-commerce and the potential disruptive effects and, you know, all the- Yeah horror stories you could read about. The B2B part of the business, it does feel like that growth has been a little bit more subdued at a market level- Mm-hmm for the last couple of years. What do you think is driving that? Mm-hmm. I mean, what do you think about the outlook, maybe looking out five years on the B2B side? Yeah. So first of all, that's why when I, you know, when we the goods that we move through our system are the high-value goods of the economy. That's why we estimate about, we move about $2 trillion of goods. If you actually size the value of the goods that we move through the system. So these are things that, you know, go through FedEx, whether it is medical equipment, whether it's high fashion, whether it is electronics and so on and so forth. So what we are now seeing is the tail end of the pandemic whiplash. And that's where the industrial goods, you know, they're caught up in this bigger supply chain boom fact that I talked about. But again, like I said, if you actually close your eyes and look four years, we're still growing 6% CAGR. It's just that the recent two years have been on the downdraft. And the great news for FedEx is that we have now uniquely growing operating profit, even in a declining demand environment. And so there is, when this bottoms out and comes back, and I'm not going to sit here timing right now, that's not good, good, as to say, quiet period, is that, there's significant leverages in our business, especially as, you know, we have shown our ability uniquely in our industry to generate operating profit growth, despite the decline. Okay, so do you think about the network integration? Now, you mentioned you're starting to take the time-definite air and the day-definite Ground network and put together into a new solution, right? The driver of this is efficiency gain, capabilities? Well, I think it's a very simple, you know, when we have, as I said in my opening remarks, we have two trucks coming to a business delivering multiple packages. There's insignificant density, and we optimize the rest of the network for that. But when you're delivering to a house, and you order two packages, and one is coming from one truck and the other one is from the other truck. That's where, you know, we have to do this restructuring. So the Network 2.0 ultimately delivers one package, one truck, one neighborhood, and that's where the efficiency comes from. And, it requires a lot of work, and we have prepared for it. Technology has to work, facilities have to work, and, so that's, you know, we're excited about the progress we're making so far. So, say it takes a lot of pre-work, but we've announced this a while back. We're now getting to the point where the rubber is gonna start meeting- It already is. It already is. Right. It already is. The express, the ground overhead structures are gonna be collapsed? Well, so I'm gonna distinguish between the network that is coming together and the organization. Mm-hmm. So as of June first, we're going to an organizational construct that's just one organization. So, you know, instead of having two of everything, we have one of everything. And so that work has already been done, and, you know, and we go into a new structure starting in, on Saturday. Yep. Then over the next two or three years, FY 27, is when we get to the network integration. So it's just, But the work is well underway, I mean, and we are making progress. We're making very steady progress, keeping in mind that the customer experience should get better. That, that's, that's our mantra here, making sure our customer experience gets better. So as we're thinking about putting these networks together, is the idea, take all the volume, stick it in one network, shut down a bunch of buildings, keep the existing assets? Like, how should we be thinking about the capacity implications? Well, you know, you know, if you think about it, I think, you know, we will be able to bring down the total footprint of our facilities and to be able to serve the same market. Now, we, of course, it does, and when it does grow, we can go into it as well. So we'll get more efficient in the number of facilities we have. We get more efficient in the utilization of our routes and all the way around, and of course, the background. That's not gonna be, like, a one-size-fits-all solution. Different markets are gonna have different- Yes. Types of implementations. Yes. It's a little bit of a hybrid. It's, it's gonna be a hybrid model, and we will, you know, again, based on data and flows, we will determine which model makes sense for any particular market. Okay, and as you think about that, asset rationalization part of that, is that a meaningful source of potential uplift in the for investors to think about? Or is that just- Well- - a byproduct of? Well, I'm not gonna break it up today, but, you know, what I'll say that we have committed to delivering $2 billion of savings over and above the $4 billion of savings in FY 2025, plus another $2 billion by FY 2027. That's a sizable chunk of money. So and I think we get significantly more efficient that way. So that, we're in that exact period where all this is gonna happen. So within those numbers, right, those cost numbers, the $2.4, and the $2.4 billion? We are this fiscal year, we come fiscal 2024 is $1.8. Yep. Next fiscal year, 2.2. That's $4 billion in total- Yep. plus another 2 by 2024. So the 2.2- Mm-hmm. Right? As you guys are managing that from a program office level, how should investors think about that dropping to the bottom line? Yeah, I mean- Obviously, changes in the business and changes in the baseline affect the- Well, you know, again, I'm not gonna talk about FY 25 right now. That's just- Sure. Directionally, you know, you can see what happened here this year in the $1.8 billion. Mm-hmm. That's so you can see we have broken it down into, you know, how, when it began. Let me just make it simple. Mm-hmm. When I began the fiscal year, I gave you all a simple formula. I said, revenue growth, 1, 2, 3, between $1,650-$1,850, what we said. Revenue growth was not 1, 2, 3 at all. In fact, you know, we had, you know, we see revenue decline. Yet, we are now, the range is between $1,725 and $1,850. That's what we have, that's what Wall Street thought for. The only way that we made it happen is because of the execution of our strategic cost reduction initiatives, and that's what has helped us deliver on this bottom line growth despite the revenue being off. Is it right to think, though, that if business conditions start to improve, that drop-through should be better? If the business, yeah, the leverage is significant, yes. I mean, I think we know, as I can't tell you exactly when the time's coming- Sure. But yes, that's when jaws of the crocodile. All right. And then just kind of still sitting on this capacity issue, right? So obviously, coming out of the pandemic, volume spiked, everybody added trucks. Maybe the trucks are, maybe we're in an overcapacity situation, maybe we're not. What's your view on capacity generally? And more importantly, as you think about charging the revenue management team with setting pricing, are you worried about that, or were you worried about your capacity and your network? I think we have gone through a period of this demand decline in the last two years. We managed, we can manage the last two years. Going forward, I think it's easier. And that's what we have to do. Now, we have to have a minimum network in place to connect all these points. But, you know, I think, you know, the issue that you're talking about would have been a much more important issue 12 months ago, or even 18 months ago. I think, as we look forward, as the demand starts to, you know, we will come into growth at some point here. That brings a lot of issue. Okay. So, as we talk about some of the pending for air network, Mm-hmm, yeah. changes that you're gonna be making. Yeah. Your long-running air contract with the USPS is, has- Yeah. has kind of come to an end or is gonna come to an end. Yeah, September. Yeah. Does that create opportunities in excess of the revenue you're gonna lose? Or does that maybe make it harder for you to do some of the things you wanna do in the day network? Well, one of the things that we were absolutely clear about, the post office, was that we're not going to do a deal that's bad for the long-term interest of the shareholders. I was very clear about that, and so we couldn't get to a place where we, it would make sense for us to do this. So, you know, I'll just leave it at that for today. But the idea is, at the end of the day, is that when Network 2.0 comes along and as we launch Network 2.0, we can make our networks significantly more efficient, and which will benefit the long-term interest of our shareholders. That's, that's, that's where we are. Okay. As you think about talking about the air network specifically- Mm-hmm. You know, the fleet strategy, obviously, without that incremental data line, does that change the rate of rationalization of maybe some of the aircraft or maybe early retirement, or should we be thinking about that as...? Well, you, you know, wait—you're gonna have to wait for us to talk about this on, Okay. When we are past the Quiet Period, so. All right, I figured I'd take a shot. Mm-hmm. Let's talk about portfolio for a second. Yeah. So, you have, congratulations, inherited, as the second CEO in over 50 years of the company, a broad portfolio of transportation business. Yeah. In a market where that seems to reward more- Mm. -singularly focused transportation enterprises. So as you think about the idea of being a portfolio of companies being the right strategy for FedEx, how do you think about that being the right strategy, given the market's seeming preference for cleaner pure play? Yeah. Well, we constantly review this as a matter of course, so that's, you know, it's a discipline that we consistently have. But what we now have is a unique set of solutions that, across the board, that sets us up very well. As I said in my opening remarks, 80% of our customers buy—or 8% of the revenue comes from customers who buy all three pieces of the portfolio. Increasingly now, especially with Network 2.0 and because of our international operations, we are now leveraging all parts of our portfolio to make this much, much more efficient, the whole network, much more efficient. And so they are now much more integrated than you would call a separate. This whole notion of one here, one there, is all of a sudden moving to the place where we're able to optimize across the full set of networks. So customer facing and customer portfolio, they're buying as a portfolio from FedEx, is differentiated because we now have an offering that our competition does not have. And then secondly, on an operational basis, we are significantly more efficient with the networks now that we have, because we can, you know, use one to the other. And that's the, you know, and especially now with, you know, example on the international side, you know, we're gonna have a truck, fly truck model, which actually opens up a whole premium segment of the international air freight market, where we have a small share today. And that is a-- Again, networks are very important here. Mm. Where we go from end to end without, you know, without an intermediary. So this is a—we, you know, we value the portfolio—the networks that we now have, and we're making them more integrated into one. When you think about it from a market value perspective- Mm-hmm. Just to address the issue, because it gets brought up to me a lot. Mm-hmm. The market has seemingly fell in love with the LTL sector in recent years. Mm-hmm. Capacity management, as they say, Yellow- Yeah. Revenue management is disciplined, service levels are improving. Mm-hmm. And that's resulting in much higher equity valuations. Well, we know again, you know, we look at this portfolio constantly. We think in the long-term interest of the shareholders to keep the full portfolio. We'll consider, you know, we'll look at it from a. We've done a really, really good job of LTL business only 10 years ago, 8 years ago, and that was a 6% margin business. Now it's, you know, our, that business is at, around 20% margin. And that's the work that we have done, not only on revenue management, but also our operations and our efficiency for operations. But now it's becoming an integral part of the rest of the company and, increasingly so as we move forward. So as you did dial into what changed in FedEx. Great. Mm-hmm. How much of that margin improvement is better price discipline versus actual operational? Well, I think it's, you know, I don't know. I can't tell you, you know, how much, but it's both. Definitely both. Mm. It's not revenue management is one piece of the equation, but, you know, the operational efficiency and the work that John Smith and the team have done there is just fantastic. So, you know, we've done a really remarkable job of managing both the operations and the revenue side. Okay. But if you think about what that business could be worth as a standalone LTL business, it's probably half the market value? I don't know. I mean, that's how it is, and that's how we know what we think in the long-term interest of the FedEx shareholder, that this is. You know, we will continuously look at it, but it's like, it is a clear part of, as it, especially as we move forward in Network 2.0. As you move forward into our international, this becomes a significantly increasing portion of our network strategy, in addition to the fact that the customers buy the full portfolio. Okay. As you think about another part of the portfolio, I do wanna talk about Europe. Sure. Right? The TNT acquisition, 2016. Yeah. Been a tough road. Yes. So let me talk about Europe, because that's a very important question for us. Europe, you know, just to make sure that everyone's on the same page. Europe has basically four different market segments. One is international express market segment, where historically FedEx has had, you know, a high teen share. No problem, and we're in good shape there. We also the intra-European express, think airplanes, market, where we had, you know, teen share as well. And then there is a larger intra-European ground market and an intra-country domestic market, parcel. These are the bigger market spaces, and we didn't have any presence in that. So imagine if you didn't have FedEx Ground in the U.S. So increasingly, the conversations with customers were getting more difficult because you're basically asking the customers to parcel out the traffic and give us the express, but give the larger ground to our competition. So organically building out that out versus, you know, buying an existing company, which had a very, very significant presence, especially in the intra-European ground market. So that's where TNT came in. So we had the acquisition. We had a couple of unfortunate incidents. One was a cyberattack, and then the other one was the pandemic. And so we had, you know, the environment was not the greatest in the way we integrate. But now that, you know, we are moved on from integration to value creation, and we also now have a full portfolio of services that's differentiated in the marketplace, you know, both parcel and pallet-based services that we have, and we are starting to gain share again in Europe. So Europe is a significant opportunity for FedEx. It is a high amount of focus for me personally, for all our ExCom. I'm headed there tomorrow to kick off the new year, and it's, you know, it's an upside for FedEx and I think, as you said, we've moved now from integration into value creation mode and this, you know, the pieces have started to work together. And as you think about that, that line of sight to getting that business back to an acceptable rate of return- Yeah. I know, as in DRIVE, we have, you know, specifically called out the year-over-year improvement in FY 2025, and that's just the beginning, and we will go on from there. So it's a... We have a very, very targeted number, managed very, very carefully every week. And so yeah, we are, you know, we're confident that we can get this to a place where we are, you know, I think the upside opportunity with FedEx as well. Okay. And the board has now sort of adopted ROIC as- Yes a formal benchmark Yes. measurement standard. Yes. Like, where do you think the potential is to push that? Yeah, As you think about that growth part of it, right? Yeah. What rate of return do you then maybe start thinking about, about growth as a bigger part of the story versus, versus margin improvement? Well, I think, so, there are many, many aspects of that question, so let me start to peel back the onion here a little bit. So yes, we have ROIC now as part of all the metrics that we measure and compensate our teams on. And we already made remarkable progress in this in the last, literally in the last 2 years. And I think one of the things is the fact that the aircraft modernization program is kind of now on the tail end, and 10, 10 years ago versus now, we now have the youngest fleet, one of the youngest fleets in our industry. So the aircraft CapEx is gonna come down, and so overall, now, when you return to growth, and then we have the structural cost reduction, so we have, you know, significant amount of operating income that starts to come in with the lower CapEx. Suddenly, we have an opportunity to, you know, really improve the ROIC and then, of course, free cash flow. And the destination for that free cash flow. Well- Should investors be thinking that's a capital return story, or is that going to be a redeployment story? Well, at this point, you know, those are the conversations we continuously have in the last few quarters. What was announced in the last, literally in the last few quarters. Of course, it has been primarily in the form of dividend increases and share buybacks. But we know, we'll look forward as we'll see an opportunities come up, we'll make those calls. Okay. As you now are a year or two-ish in the chair, two years in? All right. Mm. Congratulations. Thank you. As you think about, you know, kind of what you want your legacy to be, though, you know, obviously taking over from Fred Smith is a challenge. Well- Hard to out Fred Smith, Fred Smith. Yeah. What do you want to be known for kind of coming out of this? And what do you think your key messages to investors around what's gonna be different about investing in FedEx from today and maybe it has been in the past? Well, I'll tell you first thing, with Fred, I mean, it's just to build something from nothing and to build from scratch and to build it into this incredible network of logistics that I just read out to you. I mean, that is an incredible feat. It is incredible. I often quote Galileo when I say this: "I see far because I'm standing on the shoulder of a giant." I mean, it's just plain and simple. And it's just, you know, what Fred has accomplished and what FedEx has accomplished is this, in 50 years, is just starting from scratch and facing a very significantly larger and very tough competition. So I think now we have the opportunity to significantly leap forward because of the infrastructure that we have already built. And I think that's, you know, we've been through two years. You know, we have unusual period of revenue picture for the industry. You know, historically, FedEx is, you know, our revenues never actually declined. I mean, any bit of decline, we had significant hits to the profitability. But we have now fundamentally changed that dynamic, that we are improving our operating income in even in a decreasing revenue environment. But that's gonna change. So looking forward, I think firstly and foremost, I'm very, very proud of the FedEx culture, and that's, I gotta say that upfront, and then that, you know, we will, you know, it's something that is unique to FedEx, and it is attractive to us, and we're, we're part of that, and that'll, that will maintain that culture going forward. But I think the networks that we now have in place that, you know, that already establishes, gives us a differentiated play in the marketplace. And we will, you know, we will use that to really make supply chains smarter for everyone. Supply chains smarter for FedEx, make sure our operations are as smooth as they possibly can. Supply chains smarter for our customers, and supply chains smarter for the end consumer in the e-commerce world. In this environment, our digital story plays a very important role. We have—we have already built a digital twin of FedEx, and, you know, we are integrating very deeply into our customer supply chains and making sure that, we are able to provide additional value over and above. So at the end of the day, you know, if we look 5, 10 years from now, I think, you know, we will see FedEx as a, you know, globally established with a full portfolio of services that are differentiated in the marketplace to provide deep supply chain solutions for the company, but while maintaining the overall FedEx culture. As you think about, you know, from an investor standpoint- Mm-hmm. Yes. Historically, FedEx is maybe viewed as a lot more of a cyclical play, booms and busts. How does that- Yeah -proposition change over the next several years? I think from an investor point of view, I think it's a, FedEx is really at an inflection point right now, for many reasons. First, the fact that, we are able to generate operating income improvement even in the face of, demand, demand issues. That sets us up well for going forward. So that's, that's first. Second, the capital story that I just talked about, you know, we are in a place where, you know, we are about, you know, again, reflecting upwards on our ROIC. We have significant upside opportunities that are unique to FedEx, and that's the Network 2.0. That is a unique upside opportunity for FedEx. The idea of, you know, the Europe performance we have, that's an upside opportunity for FedEx. Going after the premium LTL market and, international LTL market. I coined that term, international LTL, just to make it... It's the international and the premium airfreight market, using our networks that we have. That's an opportunity for FedEx. And then the cherry on top is a digital platform story that we are starting to engage on. So I think there are several things that are unique to FedEx. I think is that we are just at the inflection point this time. Excellent. Well, we're coming up to the end of our time together. Thank you. I wanna thank you for coming out and joining us. Thank you all for participation. Obviously, if there's questions for us, you know where to reach us. And thank you, Jenny, for putting us on the calendar. Thank you very much. Hope it was useful. Absolutely. Thank you.