“However, due to the strength of our peak profitability in Q3, we do not expect as large of a sequential increase in third to fourth quarter earnings as we've seen in recent years.”

In context

“pproximately $60 million in separation-related costs that were not adjusted out of our results. These costs were primarily related to hiring and other necessary stand-alone public company costs that will drive long-term stockholder value creation. However, base yield improvement partially offset these spin and demand headwinds. Turning to our outlook and given our better-than-expected Q3 performance, along with expected and sustained positive trends at FEC, we're increasing our FY '26 adjusted diluted earnings per share forecast to $19.30 to $20.10. This compares to our prior range of $17.80 to $19. The midpoint of our outlook range implies Q4 adjusted EPS of approximately $5.80, which would be our highest quarterly earnings of the year and is directionally consistent with typical trends. However, due to the strength of our peak profitability in Q3, we do not expect as large of a sequential increase in third to fourth quarter earnings as we've seen in recent years. Additionally, the onetime tax benefit in this year's Q3 and freight's $33 million gain on sale of the facility in last year's Q4 skews sequential comparisons. I'll also note that our revised outlook does not include any incremental share repurchases in Q4. As a result, we expect an EPS headwind from share dilution based on a Q4 common share equivalent assumption of approximately 242 million shares, bringing our FY '26 expected average to 239 million shares. In addition, and due to FedEx Freight's recent debt issuance, we also anticipate a headwind in the quarter due to the resulting higher interest costs. And in total, this combined impact from higher share count and interest cost represents an approximate $0.10 sequential and year-over-year headwind that we've embedded in our Q4 outlook.”