FedEx Freight Sees December-Quarter Revenue Reaching $2.37 Billion
Key Facts
FedEx Freight expects revenue of $2.30 billion to $2.37 billion in the quarter ending Dec. 31, 2026, compared with $2.07 billion in the same period of 2025, according to a company statement on Oct. 29. It estimated adjusted diluted earnings per share of $0.65 to $0.75 after excluding separation costs, versus $1.27 on the same basis a year earlier. Before excluding separation costs, the earnings forecast ranges from $0.15 to $0.25 per share, with mark-to-market pension accounting adjustments excluded from these forecasts. The earnings range came after topping analysts' estimate of 53 cents per share, according to Reuters. The company also expects adjusted operating income of $185 million to $205 million, compared with $162 million in the corresponding quarter of 2025.
In the quarter ended Sept. 30, revenue was $2.442 billion, compared with $2.259 billion a year earlier, while adjusted diluted earnings per share reached $1.49, compared with $2.10. Adjusted operating income was $358 million, up from $320 million in the corresponding period. The results show revenue and earnings moving in different directions: revenue and adjusted operating income rose, while adjusted earnings per share fell from the prior-year level. For the four-month period ended Sept. 30, the company reported revenue of $3.3 billion, up 9.2%, and adjusted operating income of $510 million, up 16.4%. That period included June and the three months ended in September.
The company said revenue growth over the four months was driven by the positive impact of fuel surcharges, higher weight per shipment, an additional operating day and an increase in base revenue per hundredweight; these were partly offset by weaker volumes. Average daily shipments were 88.9 thousand, down 1.4% from the corresponding period, while revenue per shipment rose 10.1% to $413. Excluding fuel, revenue per shipment increased 1.6% to $318.23. Chief Financial Officer Marshall Witt said, "Underlying performance was largely in line with our expectations." The company added that its updated estimates for the transition period factored in the positive impact of fuel and slightly higher volume assumptions.
FedEx Freight raised its estimate for adjusted operating income in its transition period from June 1 to Dec. 31 to $695–715 million, compared with a previous range of $605–645 million. It also raised its adjusted operating margin forecast to 12.5%–12.7%, from 11.5%–12.0%. The transition period covers seven months, after the company changed its fiscal year-end from May 31 to Dec. 31 following completion of the separation on June 1, 2026. The company said the reported four months include June and the quarter ended in September, and that it published historical results calculated on a calendar-year basis to facilitate comparison. In the context of the separation, management said some customers bring their vendors with them, pointing to the potential for higher shipment volumes.
The shares reacted to the outlook in stages, rising 3.4% in extended trading after the Oct. 29 announcement, then jumping 14% in early trading on Oct. 30, according to Reuters. Reuters quoted Evercore ISI analysts as saying the key indicators for fourth-quarter revenue drivers all appeared to point to improvement compared with the September quarter and the first half of the year. Coverage linked the stock's rise to the improvement in those indicators and analysts' confidence in the company's ability to meet its medium-term targets. The company forecast total capital expenditures of about $365 million during the transition period through Dec. 31. It also said its quarterly and transition-period outlook assumes the current economic view and fuel-price estimates continue, with no additional economic, geopolitical or international trade developments.
For 2027, the chief financial officer said revenue growth is expected to align with the medium-term target of 4%–6%, while adjusted operating margin is heading toward a target of 15%. The company announced plans to disclose its dividend and share repurchase plan for calendar year 2027, subject to board approval. Cash and cash equivalents totaled $388 million, and total liquidity was $1.6 billion as of Sept. 30, 2026. During the four months ended on that date, the company repaid $100 million of debt ahead of schedule. These figures provide financial context for the period before the company moves to a calendar-year reporting cycle.