FedEx's Capital Spending Falls Below Depreciation Amid Strong Free Cash Flow Growth
In fiscal 2026, FedEx spent $3.8 billion on capital projects compared to depreciation and amortization of about $4.3 billion, widening the gap from a previous annual difference of around $160 million. Despite this underinvestment in its network, adjusted free cash flow reached record levels at $4.7 billion—nearly 100% of net income—and management aims for $6 billion by 2029. FedEx's debt increased to $42.9 billion as of May 2026 from $37.8 billion in November, but this was largely due to the spin-off of FedEx Freight and its associated notes. The company also raised €2 billion and $1.1 billion through new bond offerings around the time it reached an 80% stake in InPost for a potential €7.8 billion acquisition. The capital spending decline reflects strategic network optimization, including consolidating operations under Network 2.0 with fewer facilities and aircraft. Management insists this is not temporary but part of a durable trend aimed at maximizing cash generation.
Tickers: $FDX
Topics: acquisition activity capital spending depreciation free cash flow