FedEx Freight Holding Company, Inc. Deutsche Bank’s Chicago Industrials Summit

Rucha, thanks for having me and for the introduction. Before I start, I have to do my disclaimer on forward-looking comments.

Oh, yes. I've got a couple opening comments.

Then I promise I'll get to the economic questions you had.

Okay. Before we start, certain statements I'll say today can be considered forward-looking statements as defined in the Private Securities Litigation Reform Act.

Matter are subject to factors that could cause actual results to differ materially from those expressed or implied. For additional information, please refer to our press release and filings with the SEC. Just a few comments before we kick it off to the first question. Super excited to be here today, discuss FedEx Freight, the opportunity we see lie ahead for us as a standalone company. As many of you know, June 1 marked an important milestone for us as we rang the opening bell on the New York Stock Exchange, began trading as an independent standalone company with the ticker FDXF. We're roughly 70 days into it, into our journey as an independent publicly traded company.

We are at where we hope to be as we are 70 days into this, both strategically, operationally, and also financially. The separation has gone smoothly. As you all may know, a significant amount of investment has been underway in regards to not only FedEx Express or FedEx Corporation's investments, but FedEx Freight investments. It is going very smoothly, with strong execution across the organization. Our teams do remain focused on delivering the commitments that we outlined at Investor Day. Early execution reinforces our continued confidence in our ability to successfully operate as a standalone company. We continue to have strong confidence in the business and in our long-term opportunities. The medium-term outlook and the financial framework that we provided at Investor Day remains unchanged. Early progress continues to reinforce our conviction that we can and will achieve our stated strategies.

Still, we are in early innings, if you want to call it that, in regards to our initiatives, but we are encouraged by the momentum we are seeing across our business. We are beginning to see the strategy translate into tangible results. From a standalone perspective, we will continue to sharpen our strategic focus, our ability to have a dedicated investment strategy thesis enables us to accomplish that. The enhancement of accountability throughout the organization has been evident and seen, and it is really neat to see that play through. The allocation of capital with a singular objective of maximizing long-term potential for FedEx Freight continues to be our North Star, and better positioning from a focusing of resources and decision-making on opportunities that we believe will generate shareholder value.

While the independence is new to us, the strength of our franchise, as many of you know, is long established, starting with Viking Freight and adding to that American Freightways, and then also with Watkins Motor Lines, and the combination of those three acquisitions created a North American footprint that does allow us to be the largest LTL carrier and does put us in a position of strength, really to enter the next chapter as the industry's largest LTL carrier. We operate the fastest and densest LTL network in North America by published transit standard times, and it is supported by a proven operating model and a renewed focus on high quality, efficient, and profitable service. Recent quarter, which was ended May 31st, delivered meaningful improvements in a number of areas, specifically safety, claims ratio, and customer service.

From a technology standpoint, that continued to be a key driver for future performance and future performance improvement. We continue to invest in those tools and capabilities that allow us to improve visibility, efficiency, and value. We are focused on enhancing the customer experience. That is a journey that will continue on for quite some time. That allows us to continue to optimize our operational footprint. We want to leverage our advanced analytics, continue to expand automation, and deliver digital solutions across the business. Our goal is to be a more responsive, efficient network and an easier customer experience, which we call easy to do business with attitude in regards to our customers. From a commercial perspective, we are firing on all cylinders for the first time in more than a decade. We have a dedicated LTL sales force focused exclusively on growing our business.

We have an increased focus that helps deepen the existing customer relationships and expand into attractive and profitable markets. Our sales team is ramping quickly and integrating seamlessly across the organization, and already we are seeing meaningful impact with customers and our frontline employees. One of our greatest competitive advantages is our dual service model. That is the Priority and Economy services that we offer through a single integrated network. Both operate in the same asset base, allowing us to be efficient, and currently generate similar operating margins. It provides customers with the flexibility and choice while optimizing our network productivity. To us, it creates attractive returns and strengthens the customer relationships, as approximately 50% of our customers use both of those services. It is a powerful differentiator that supports efficiency across our network. From a financial strength and capital allocation perspective, we are executing from a position of strength.

It is supported by a strong balance sheet with substantial financial flexibility. If you think about our capital allocation priorities, they remain straightforward and disciplined. We want to invest in our business. We also want to deliver and maintain a high grade of balance sheet with investment-grade rating. We want to deliver attractive shareholder returns, and at the right time, evaluate selected M&A opportunities. We are focused on strengthening our competitive position while creating shareholder value. We believe FedEx Freight and the value proposition is simple and compelling. It provides significant opportunity to unlock value that has long existed within our franchise. It is supported by proven leadership and a highly dedicated set of employees and leadership team, and it brings deep industry expertise, operational experience, and disciplined execution. These strengths give us the momentum and confidence in the opportunities that we see ahead of us.