FedEx Freight Revenue Reaches $3.3 Billion in Four-Month Transition Period

Key Facts

FedEx Freight reported revenue of $3.3 billion during a one-time four-month transition period that ended on September 30, 2026, up 9.2% year over year. The period included June and the three months ended in September, as the company moved to a calendar-year reporting cycle, according to its statement. Operating income, by contrast, was $383 million, down 6.1% from the comparable period. Adjusted operating income, which excludes separation costs, rose 16.4% to $510 million. The statement did not provide a comparison between the company's results and analyst estimates, so the official figures do not support the claim in the initial version of the story that it beat market expectations.

The divergence between the measures extended to earnings per share: GAAP diluted earnings per share were $1.54, down 43% year over year, while adjusted diluted earnings per share were $2.15, down 24.6%. The adjusted measures exclude separation costs, and the company says they supplement GAAP results to make performance easier to compare. It clarified, however, that these measures do not replace or take precedence over GAAP figures. The comparison covers an unusual four-month transition period, rather than a full annual reporting cycle. The results therefore present a mixed picture: adjusted operating income improved while adjusted and GAAP earnings per share declined.

The company attributed revenue growth mainly to the positive effect of fuel surcharges, higher weight per shipment, an additional operating day and an increase in base revenue per hundredweight. These factors partly offset weaker shipment volumes. Average revenue per shipment rose 10.1% to $413, while average daily shipments fell 1.4% to 88.9 thousand. Excluding fuel surcharges, revenue per shipment increased 1.6% to $318.23. The figures highlight the reliance of revenue growth on higher yield per shipment, while the pace of daily shipments remained below its level a year earlier.

Separation and other costs totaled $127 million during the four months, compared with $30 million in the year-earlier period, according to the company's quarterly filing. Those costs included $105 million in the third quarter alone. The company attributed most of the expenses to professional services related to the separation and employee costs. As of September 30, cash and cash equivalents stood at $388 million, and total liquidity reached $1.6 billion. The company also repaid $100 million of debt ahead of schedule using cash generated from operations.

The company spent $151 million on capital expenditures during the four months and expects total spending of about $365 million for the transition period from June 1 to December 31, 2026. The investments are directed toward equipment, technology and facilities. Chief Executive John Smith said the first four months as an independent company reflected “strong execution across the enterprise and tangible progress on the strategic priorities” it had set earlier in the year. He added that the company sees momentum in its operational, commercial and technology initiatives. The plans come as the company completes its first transitional reporting period as an independent entity.

FedEx Freight raised its adjusted operating income forecast for the transition period to between $695 million and $715 million, from a previous range of $605 million to $645 million. It also raised its adjusted operating margin forecast to 12.5%–12.7% from 11.5%–12.0%. The company said the updated outlook reflects the effect of fuel and assumptions for slightly higher volume. Its forecast for adjusted diluted earnings per share, excluding separation costs, is now $2.80–$2.90, compared with $2.40–$2.60 previously. The forecast for earnings per share before excluding separation costs and before mark-to-market pension accounting adjustments fell to $1.69–$1.79 from $1.75–$1.95.

For the three months ending December 31, 2026, the company expects revenue of between $2.30 billion and $2.37 billion, compared with $2.07 billion in the year-earlier period. It expects adjusted operating income of between $185 million and $205 million, compared with $162 million a year earlier. Chief Financial Officer Marshall Witt said revenue growth in 2027 is assumed to be in line with the medium-term target of 4%–6%, and that adjusted operating margin is tracking toward the 15% target. The company also aims to announce its dividend and share repurchase plan for calendar 2027, subject to board approval. In the market, shares closed at $109.69 on October 29, then rose about 14% in early trading on October 30, according to Reuters.