FedEx $FDX Freight reported its first earnings as a standalone public company on Thursday, posting a steep drop in quarterly operating income that was largely driven by costs tied to its separation from FedEx Corporation.
The fourth quarter ending May 31 saw operating income decline to $158 million, a 66.9% year-over-year drop, with $205 million in spinoff-related charges weighing heavily on the result. Stripping out those charges, adjusted operating income totaled $363 million, down roughly 24%. On the top line, a 4.8% gain brought revenue to $2.4 billion, with fuel surcharges and heavier average shipment weights providing the lift, even as volume declined 5.9%.
For the full fiscal year, operating income dropped 58.6% to $616 million, while revenue slipped 1.1% to $8.8 billion, the company said.
FedEx Freight stock beat analyst expectations for revenue in the quarter. Against a consensus forecast of just under $2.3 billion, the quarter's $2.4 billion revenue figure cleared the bar, while adjusted operating income of $363 million outpaced the $333 million analysts had expected, Barron's reported. FedEx Freight stock was roughly flat in after-hours trading.
"As a newly independent public company, we are moving forward with a clear strategy focused on profitable growth and service differentiation," CEO John Smith said in a statement.
Along with the results, FedEx Freight issued guidance for a seven-month transition period running from June 1 through Dec. 31, 2026, reflecting a shift to a calendar fiscal year. For that transition window, the company projected top-line growth of 4% to 6% against the prior-year comparable period, along with adjusted earnings per share in a $2.40 to $2.60 range, a figure that strips out separation-related charges and their associated tax impacts.
Speaking on an earnings call, Smith told analysts the company has set its sights on industries such as data center construction, grocery distribution, and healthcare — segments that historically represented a limited share of its customer base. "We're transitioning to the hunting phase to go after new business," he told Transport Topics.
FedEx Freight, North America's largest less-than-truckload carrier, began trading on the New York Stock Exchange on June 1 after completing its spinoff from FedEx Corporation. As Quartz previously reported on FedEx's final earnings that included the freight segment, FedEx Freight transferred a cash dividend of roughly $4.1 billion back to FedEx Corporation as part of the separation. FedEx is now focused on its parcel delivery operations and forecast roughly 11% revenue growth for calendar year 2026 from continuing operations, excluding the freight business.