Why is there such a large gap between GAAP and adjusted EPS this quarter?

The main driver is a non-cash mark-to-market (MTM) pension accounting adjustment that added $2.05 per diluted share to GAAP results in Q4 FY2026. FedEx also excluded $0.97 per share of FedEx Freight spin-off costs and $0.66 per share of business optimization costs. These items are excluded because management views them as unrelated to core operations, but MTM pension swings are unpredictable and can materially change reported GAAP earnings.

Is FedEx's underlying profitability improving?

On an adjusted basis, yes in dollar terms: Q4 adjusted operating income rose to $2.09 billion from $2.02 billion, and full-year adjusted operating income grew 8% to $6.61 billion. Adjusted EPS grew 11% for the full year. However, the Q4 adjusted operating margin declined to 8.4% from 9.1%, reflecting cost pressures such as higher purchased transportation, wages, incentive compensation, and fuel, along with global trade policy impacts.

How does the FedEx Freight spin-off affect the company's financial picture and the 2026 outlook?

FedEx Freight is now a separate public company, and its results are treated as discontinued operations in the calendar 2026 outlook, so guidance reflects continuing operations only. FedEx received a $4.1 billion cash dividend from FedEx Freight, which is being used in a manner intended to preserve the tax-free nature of the spin-off. Investors should note that year-over-year comparisons will change once FedEx files recast financial statements for calendar 2024 and 2025, expected by mid-August 2026.

Is the $13.3 billion cash balance a reliable indicator of financial strength?

Not entirely. The balance includes the $4.1 billion FedEx Freight dividend, which is largely a one-time transaction proceed, and about $800 million of IEEPA tariff refunds that are being held for return to customers. Excluding these items, cash would be substantially lower, and FedEx's total debt increased to roughly $25 billion (long-term debt plus current portion and short-term borrowings), so investors should weigh the balance sheet with these adjustments in mind.

What are the key risks and uncertainties highlighted for investors?

Key risks include the unpredictable size of future pension MTM adjustments, which are excluded from guidance; global trade policy and tariff developments, including potential refunds and collections; fuel price volatility tied to geopolitical conflicts; execution risk on the transformation program and Network 2.0; and the interim leadership of the finance function, with Claude Russ serving as interim CFO during the transition year. Guidance also assumes no adverse economic or geopolitical developments.

FDX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed June 23, 2026. Cited figures are marked; the original filing is the authoritative source.

FedEx (FDX) reported fiscal fourth-quarter 2026 results (quarter ended May 31, 2026) with revenue of $25.0 billion^a, up 13% year over year.

GAAP operating income was $1.55 billion^b (6.2% margin), while adjusted operating income was $2.09 billion (8.4% margin), up from $2.02 billion a year earlier. GAAP diluted EPS was $6.60 and adjusted diluted EPS was $6.31, versus $6.07 adjusted in the prior-year quarter. The gap between GAAP and adjusted results is large, driven mainly by a $2.05 per share non-cash mark-to-market pension gain that boosted GAAP net income, offset by FedEx Freight spin-off costs ($0.97 per share), business optimization costs ($0.66), and other items.

Investors should focus on adjusted figures for operating trends while recognizing that pension MTM swings can meaningfully distort GAAP earnings. For fiscal 2026, revenue was $94.7 billion^c (up 8%) and adjusted diluted EPS was $20.24, up from $18.19, with adjusted operating income rising 8% to $6.61 billion. FedEx exceeded its $1 billion transformation cost-savings goal, and capital spending fell 6% to $3.8 billion, or 4.0% of revenue, the lowest level in company history.

The FedEx Freight spin-off was completed June 1, 2026, and FedEx Freight paid FedEx a $4.1 billion^d cash dividend. Fiscal year-end cash of $13.3 billion includes that dividend and roughly $800 million of IEEPA tariff refunds held for customers, so underlying liquidity is less than the headline figure suggests. Looking ahead, FedEx is now on a calendar year, and its calendar 2026 outlook (on a continuing-operations basis, excluding FedEx Freight) calls for about 11% revenue growth, GAAP diluted EPS of $16.55 to $17.75, and adjusted diluted EPS of $16.90 to $18.10.

Capital spending is guided to $3.9 billion, the dividend rises 5% (after adjusting for the spin-off), and the company may repurchase up to $1 billion of stock opportunistically. The outlook excludes additional pension MTM adjustments that management cannot predict, and it assumes no adverse economic, geopolitical, or trade developments. Interim CFO Claude Russ is leading finance during this transition year, and the company also flagged that a full recast of prior-year results for the spin-off will be filed by mid-August 2026.

02—Key points

Key Highlights

Q4 FY2026 revenue rose 13% to $25.0 billion; Federal Express segment revenue grew 14%, led by 13% growth in U.S. domestic package revenue and 15% growth in international export package revenue.
Q4 adjusted operating income reached $2.09 billion (8.4% margin) versus $2.02 billion (9.1%) a year earlier; the margin declined despite higher dollar profit, partly reflecting increased fuel and purchased transportation costs.
GAAP diluted EPS of $6.60 was inflated by a $2.05 per share non-cash pension MTM gain; adjusted diluted EPS was $6.31, up from $6.07.
Full-year FY2026 adjusted diluted EPS was $20.24 (up 11%) on $94.7 billion of revenue; GAAP EPS was $18.55, and the company exceeded its $1 billion transformation savings target.
FedEx Freight spin-off was completed June 1, 2026, with a $4.1 billion cash dividend to FedEx; the FedEx Freight segment's Q4 operating income fell 67% on a GAAP basis due to $205 million of separation costs.
Calendar 2026 guidance: ~11% revenue growth, adjusted diluted EPS of $16.90 to $18.10, capex of $3.9 billion, and a $1 billion opportunistic buyback; fiscal year-end changes from May 31 to December 31 effective June 1, 2026.
Liquidity and capital returns: FY2026 shareholder returns of $2.2 billion ($776 million buybacks, $1.4 billion dividends), with $1.3 billion remaining on the 2024 repurchase authorization; long-term debt rose to $23.3 billion from $19.2 billion.

03—Questions

Frequently Asked Questions

Why is there such a large gap between GAAP and adjusted EPS this quarter?
The main driver is a non-cash mark-to-market (MTM) pension accounting adjustment that added $2.05 per diluted share to GAAP results in Q4 FY2026. FedEx also excluded $0.97 per share of FedEx Freight spin-off costs and $0.66 per share of business optimization costs. These items are excluded because management views them as unrelated to core operations, but MTM pension swings are unpredictable and can materially change reported GAAP earnings.
Is FedEx's underlying profitability improving?
On an adjusted basis, yes in dollar terms: Q4 adjusted operating income rose to $2.09 billion from $2.02 billion, and full-year adjusted operating income grew 8% to $6.61 billion. Adjusted EPS grew 11% for the full year. However, the Q4 adjusted operating margin declined to 8.4% from 9.1%, reflecting cost pressures such as higher purchased transportation, wages, incentive compensation, and fuel, along with global trade policy impacts.
How does the FedEx Freight spin-off affect the company's financial picture and the 2026 outlook?
FedEx Freight is now a separate public company, and its results are treated as discontinued operations in the calendar 2026 outlook, so guidance reflects continuing operations only. FedEx received a $4.1 billion cash dividend from FedEx Freight, which is being used in a manner intended to preserve the tax-free nature of the spin-off. Investors should note that year-over-year comparisons will change once FedEx files recast financial statements for calendar 2024 and 2025, expected by mid-August 2026.
Is the $13.3 billion cash balance a reliable indicator of financial strength?
Not entirely. The balance includes the $4.1 billion FedEx Freight dividend, which is largely a one-time transaction proceed, and about $800 million of IEEPA tariff refunds that are being held for return to customers. Excluding these items, cash would be substantially lower, and FedEx's total debt increased to roughly $25 billion (long-term debt plus current portion and short-term borrowings), so investors should weigh the balance sheet with these adjustments in mind.
What are the key risks and uncertainties highlighted for investors?
Key risks include the unpredictable size of future pension MTM adjustments, which are excluded from guidance; global trade policy and tariff developments, including potential refunds and collections; fuel price volatility tied to geopolitical conflicts; execution risk on the transformation program and Network 2.0; and the interim leadership of the finance function, with Claude Russ serving as interim CFO during the transition year. Guidance also assumes no adverse economic or geopolitical developments.

04—Continue

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