FedEx Corporation. Forward-Looking Statements 12/19/2017. Second Quarter FY18 Earnings Review December 19, 2017

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1 FedEx Corporation Second Quarter FY18 Earnings Review December 19, 2017 Forward-Looking Statements Certain statements in this presentation may be considered forward-looking statements, such as statements relating to management s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, a significant data breach or other disruption to our technology infrastructure, the ongoing impact of the June 27, 2017 cyberattack affecting TNT Express, our ability to successfully integrate the businesses and operations of FedEx Express and TNT Express in the expected time frame or at the expected cost, changes in fuel prices or currency exchange rates, our ability to match capacity to shifting volume levels, new U.S. domestic or international government regulation, our ability to effectively operate, integrate and leverage acquired businesses, our ability to achieve our FedEx Express segment profit improvement goal, legal challenges or changes related to owner-operators engaged by FedEx Ground and the drivers providing services on their behalf, disruptions or modifications in service by, or changes in the business or financial soundness of, the U.S. Postal Service, the impact from any terrorist activities or international conflicts and other factors which can be found in FedEx Corp. s and its subsidiaries press releases and FedEx Corp. s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 1

2 FedEx Executives on the Call Frederick W. Smith, Chairman and CEO David J. Bronczek, President and COO Alan B. Graf, Jr., EVP and CFO Mark R. Allen, EVP, General Counsel & Secretary Robert B. Carter, EVP, FedEx Information Services and CIO Donald F. Colleran, EVP, Chief Sales Officer Rajesh Subramaniam, EVP, Chief Marketing & Communications Officer David L. Cunningham, President and CEO of FedEx Express Henry J. Maier, President and CEO of FedEx Ground Michael L. Ducker, President and CEO of FedEx Freight Frederick W. Smith Chairman and CEO 2

3 Alan B. Graf, Jr. Executive Vice President and CFO FedEx Corporation Second Quarter FY18 Results Adjusted EPS $3.18, up 15%* Adjusted operating margin 8.5%, up 30 bps* Higher base rates, volume growth and a favorable net impact from fuel at each transportation segment *See the Non-GAAP Appendix for a reconciliation of presented non-gaap measures to the most directly comparable GAAP measures 3

4 FedEx Express Q2 Results, Revenue Up 8% Adjusted operating income $813 million, up 11%* Adjusted operating margin 8.7%, up 20 b.p.* Estimated cyberattack impact ~$100 million Adjusted results exclude TNT Express integration expenses of $96 million *See the Non-GAAP Appendix for a reconciliation of presented non-gaap measures to the most directly comparable GAAP measures FedEx Ground Q2 Results, Revenue Up 12% Operating income $521 million, up 12% Operating margin 10.6%, up 10 b.p. 4

5 FedEx Freight Q2 Results, Revenue up 10% Operating income $118 million, up 34% Operating margin 6.7%, up 120 b.p. FedEx Corporation Full-Year FY18 Guidance Diluted EPS before mark-to-market pension adjustments (non-gaap)* $11.45 to $12.05 Excluding: TNT Express integration expenses FedEx Trade Networks legal matters $1.23 $0.02 Diluted EPS with adjustments* $12.70 to $13.30 *See the Non-GAAP Appendix for a reconciliation of presented non-gaap measures to the most directly comparable GAAP measures 5

6 FedEx Corporation Full-Year FY18 Guidance Adjusted FY18 earnings guidance range is $12.70 to $13.30*, assuming moderate economic growth, current U.S. tax laws, and continued recovery from the cyberattack Capital expenditures expected to be $5.9 billion for FY18 Reaffirm commitment to improve operating income at FedEx Express segment by $1.2 to $1.5 billion in FY20 versus FY17, assuming moderate economic growth, current accounting rules and U.S. tax laws, and continued recovery from the cyberattack *See the Non-GAAP Appendix for a reconciliation of presented non-gaap measures to the most directly comparable GAAP measures Rajesh Subramaniam Executive Vice President, Chief Marketing and Communications Officer 6

7 Economic Outlook Expectation for Continued Moderate Growth CY16 CY17 CY18 GDP Forecast* U.S. 1.5% 2.3% 2.5% Global 2.3% 3.0% 3.0% U.S. Growth* Industrial Production (1.2%) 1.9% 2.6% Consumer Spending 2.7% 2.7% 2.6% * FedEx Forecast December 2017 FedEx Express U.S. Domestic Growing U.S. Domestic Package Revenue and Yield (Revenue Per Package) Q2 FY18 Q2 FY17 Change U.S. Domestic Package Revenue* U.S. Domestic Package ADV U.S. Domestic Package Yield* $3.14B $2.97B 6% 2.73M 2.71M 1% $18.24 $ % * Includes fuel surcharges 7

8 FedEx Express International Export Growing Demand for International Services Q2 FY18 Q2 FY17 Change International Export Package Revenue* International Export Package ADV International Export Package Yield* $2.65B $2.48B 7% 821K 797K 3% $51.34 $ % * Includes fuel surcharges and exchange rate impact FedEx Ground Double-Digit Revenue Growth Q2 FY18 Q2 FY17 Change Segment Revenue* $4.93B $4.42B 12% FedEx Ground Package ADV FedEx Ground Package Yield* 8.58M 8.00M 7% $8.35 $7.95 5% * Includes fuel surcharges 8

9 FedEx Freight Increasing LTL Revenue per Shipment Q2 FY18 Q2 FY17 Change Segment Revenue* $1.76B $1.60B 10% Average Daily LTL Shipments Weight per LTL Shipment (lbs) LTL Revenue Per Shipment* 109K 104K 4% 1,187 1,149 3% $ $ % * Includes fuel surcharges 80% of people in the U.S. are 9 minutes or less from a FedEx hold location On Track for Another Record Peak Season Outstanding service Added approximately 8,200 FedEx Onsite locations in 2017 More than 10,000 convenient pick-up locations 9

10 David J. Bronczek President and Chief Operating Officer FedEx Express Operations Update Underlying fundamentals remain strong Higher base rates Growth in international package and freight services Improving cost efficiencies (e.g., aircraft fleet reliability) 10

11 TNT Express Operations Update IT recovery process is complete: Improved reliability Improved security Increasing investments to expedite portions of the integration process FedEx Ground Operations Update Significant revenue and operating income growth Implementing cost controls Balancing capacity expansion with pricing and volume growth 11

12 FedEx Freight Operations Update Growth in revenue and profitability Disciplined pricing strategies Investments improving safety and efficiency If you would like to send a question for the call, please include your full name and contact information with your to ir@fedex.com Preference will be given to inquiries of a long-term, strategic nature. 12

13 Non-GAAP Appendix Explanatory Note on Non-GAAP Financial Measures The company reports its financial results in accordance with accounting principles generally accepted in the United States ( GAAP ). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-gaap (or adjusted ) financial measures. The rationale for management s use of these non-gaap financial measures is included in the earnings release for the quarter ended November 30, Reconciliations of certain non-gaap measures used in this earnings presentation to the most directly comparable GAAP measures are included in this Non-GAAP Appendix. 13

14 Q2 FY18 Reconciliation for FedEx Corp. Dollars in millions, except EPS Operating Income Operating Margin Income Taxes 1 Net Income 2 Diluted EPS 3 GAAP measure $1, % $364 $775 $2.84 TNT Express integration expenses % Non-GAAP measure $1, % $395 $866 $3.18 1,2,3,4 See Footnotes for Non-GAAP Reconciliation Slides below for details. Q2 FY18 Reconciliation for FedEx Express Segment Dollars in millions Operating Income Margin GAAP measure $ % TNT Express integration expenses % Non-GAAP measure $ % 14

15 Q2 FY17 Reconciliation for FedEx Corp. Dollars in millions, except EPS Operating Income Operating Margin Income Taxes 1 Net Income 2 Diluted EPS GAAP measure $1, % $378 $700 $2.59 TNT Express integration expenses % Non-GAAP measure $1, % $386 $750 $2.77 1,2,4 See Footnotes for Non-GAAP Reconciliation Slides below for details. Q2 FY17 Reconciliation for FedEx Express Segment Dollars in millions Operating Income Margin GAAP measure $ % TNT Express integration expenses % Non-GAAP measure $ % 15

16 FedEx Corporation Full-Year FY18 Guidance Dollars in millions, except EPS Adjustments Diluted EPS Diluted EPS before mark-to-market pension accounting adjustments (non-gaap) 5 $11.45 to $12.05 TNT Express integration expenses Income tax effect 1 Net of tax effect FedEx Trade Networks legal matters Income tax effect 1 Net of tax effect $450 (116) $ $ 7 (2) $ Diluted EPS with adjustments 5 $12.70 to $ ,5 See Footnotes for Non-GAAP Reconciliation Slides below for details. Footnotes for FedEx Corp. Non-GAAP Reconciliation Slides 1. Income taxes are based on the company s approximate statutory tax rates (under current U.S. tax laws) applicable to each transaction. 2. Effect of Total other (expense) income on net income amount not shown. 3. Does not sum to total due to rounding. 4. These expenses were recognized at FedEx Corporate and FedEx Express. 5. The year-end MTM pension accounting adjustments, which are impracticable to calculate at this time, are excluded. 16