UPS (NYSE:UPS) today announced first-quarter 2016 diluted earnings
per share of $1.27, a 13% increase over the same period last year.
The company achieved record first quarter results driven by both
the U.S. Domestic and International small package segments.
International operating profit increased 15% to $574 million. U.S.
Domestic operating margin expanded on solid revenue growth and
reduced per unit costs from productivity gains.
Total revenue was $14.4 billion, up 3.2% over the same quarter
last year. Revenue growth was slowed by lower fuel surcharges and
currency exchange rates. On a currency-neutral basis, revenue
increased 3.7%. Lower fuel surcharge rates reduced revenue growth
by approximately 150 basis points.
“We continue to execute well in all areas of our long-term
enterprise strategy,” said David Abney, UPS chairman and CEO. “The
combination of revenue growth and benefits from our accelerated
investments generated strong financial results in the quarter.”
Cash Flow
For the three months ended Mar. 31, UPS generated $2.7 billion
in cash from operations, and $2.2 billion in free cash flow. The
company paid dividends of about $670 million, an increase of 6.8%
per share over the same quarter in 2015. UPS also repurchased 6.8
million shares for approximately $680 million.
U.S. Domestic Package
U.S. Domestic operating profit increased 7.6% to $1.1 billion,
and operating margin expanded 50 basis points to 12.1%.
Productivity improvements bolstered by technology, combined with
lower fuel cost resulted in a 1.9% reduction in cost per unit
compared to the same quarter in 2015.
Total revenue increased 3.1% over the first quarter
of 2015, to $9.1 billion. Average daily package volume increased
2.8% with Ground products up 3.3% and Next Day Air up 3.0%. High
demand from ecommerce shippers contributed to fast growth in
business-to-consumer (B2C) deliveries this quarter.
Revenue per package declined by 1.3% as base rate improvements
were offset by lower fuel surcharges and changes in product and
customer mix. Fuel surcharge rates reduced yield growth by 120
basis points.
International Package
International operating profit jumped more than 15% to $574
million during the quarter, with improved performance from all
regions. Disciplined pricing combined with network efficiency gains
contributed to the increase in profitability.
Revenue was down 1.9%, however on a currency-neutral basis it
was flat to the prior year. Lower fuel surcharges reduced revenue
by approximately 200 basis points. Daily Export shipments increased
slightly, as growth out of Asia and Europe offset declines in U.S.
exports. Shipment growth from middle-market customers outpaced
enterprise accounts during the quarter.
Total revenue per package increased 1.6% on a currency-neutral
basis. Solid base rate improvements across all regions were reduced
by changes in fuel surcharge rates. Premium products grew faster
than non-premium during the quarter.
Supply Chain & Freight
Supply Chain and Freight revenue increased by more than 10% to
$2.4 billion. This was mainly due to the acquisition of Coyote
Logistics in the third quarter of last year. Operating profit was
better than anticipated, but slightly less than last year. Weak
market conditions in the Air Freight Forwarding and LTL markets
weighed on top line growth.
The Forwarding business expanded operating margins through a
focus on revenue quality and operating cost reductions. The
asset-light, truckload brokerage business is performing well, even
in a market that remains soft.
UPS Freight LTL revenue per hundredweight increased 2.1% over
the same period last year. Total tonnage remains challenged by the
current market conditions. The business unit remains focused on
disciplined revenue management.
Outlook
“Revenue management actions and improved network efficiencies
are driving substantial operating profit growth,” said Richard
Peretz, UPS chief financial officer. “We expect this momentum to
continue, and therefore reaffirm our guidance for 2016 full-year
diluted earnings per share of $5.70 to $5.90, an increase of 5% to
9% over adjusted 2015 results.”
Conference Call Information:
UPS CEO David Abney and CFO Richard Peretz will discuss first
quarter results with investors and analysts during a conference
call at 8:30 a.m. ET, April 28, 2016. That call is open to
listeners through a live Webcast. To access the call, go to
www.investors.ups.com and click on “Earnings Webcast.”
About UPS
UPS (NYSE:UPS) is a global leader in logistics, offering a broad
range of solutions including the transportation of packages and
freight; the facilitation of international trade, and the
deployment of advanced technology to more efficiently manage the
world of business. Headquartered in Atlanta, UPS serves more than
220 countries and territories worldwide. The company can be found
on the Web at ups.com® and its corporate blog can be found at
Longitudes.ups.com. To get UPS news direct, visit
pressroom.ups.com/RSS.
We supplement the reporting of our financial information
determined under generally accepted accounting principles ("GAAP")
with certain non-GAAP financial measures, including, as applicable,
"as adjusted" operating profit, operating margin, pre-tax income,
net income and earnings per share. The equivalent measures
determined in accordance with GAAP are also referred to as
"reported" or "unadjusted.” Additionally, we disclose free cash
flow as well as revenue and revenue per piece growth adjusted for
the impact of foreign currency. We believe that these adjusted
measures provide meaningful information to assist investors and
analysts in understanding our financial results and assessing our
prospects for future performance. We believe these adjusted
financial measures are important indicators of our recurring
operations because they exclude items that may not be indicative
of, or are unrelated to, our core operating results, and provide a
better baseline for analyzing trends in our underlying businesses.
Furthermore, we use these adjusted financial measures to determine
awards for our management personnel under our incentive
compensation plans.
Free cash flow is defined as net cash from operations less
capital expenditures, proceeds from disposals of property, plant
and equipment, net change in finance receivables and other
investing activities. We believe this metric is an important
indicator of how much cash is generated by regular business
operations and we use it as a measure of cash available to meet
debt obligations and return cash to shareowners.
Because non-GAAP financial measures are not standardized, it may
not be possible to compare these financial measures with other
companies' non-GAAP financial measures having the same or similar
names. These adjusted financial measures should not be considered
in isolation or as a substitute for GAAP revenue, operating profit,
operating margin, income before taxes, net income, earnings per
share and cash flow from operations, which are the most directly
comparable GAAP financial measures. These non-GAAP financial
measures reflect an additional way of viewing aspects of our
operations that, when viewed with our GAAP results and the
preceding reconciliations to corresponding GAAP financial measures,
provide a more complete understanding of our business. We strongly
encourage investors to review our financial statements and
publicly-filed reports in their entirety and not to rely on any
single financial measure.
Except for historical information contained herein, the
statements made in this release constitute forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Such forward-looking statements, including statements regarding the
intent, belief or current expectations of UPS and its management
regarding the company's strategic directions, prospects and future
results, involve certain risks and uncertainties. Certain factors
may cause actual results to differ materially from those contained
in the forward-looking statements, including economic and other
conditions in the markets in which we operate, governmental
regulations, our competitive environment, changes in the fact or
assumptions underlying our health and pension benefit funding
obligations, negotiation and ratification of labor contracts,
strikes, work stoppages and slowdowns, changes in aviation and
motor fuel prices, cyclical and seasonal fluctuations in our
operating results, and other risks discussed in the company's Form
10-K and other filings with the Securities and Exchange Commission,
which discussions are incorporated herein by reference.
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
March 31 |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Change |
|
% Change |
|
(amounts
in millions, except per share data) |
|
|
|
|
|
|
|
|
Statement of
Income Data: |
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
U.S. Domestic Package |
$ |
9,084 |
|
|
$ |
8,814 |
|
|
$ |
270 |
|
|
|
3.1 |
% |
|
International Package |
|
2,914 |
|
|
|
2,970 |
|
|
|
(56 |
) |
|
|
-1.9 |
% |
|
Supply Chain & Freight |
|
2,420 |
|
|
|
2,193 |
|
|
|
227 |
|
|
|
10.4 |
% |
|
Total revenue |
|
14,418 |
|
|
|
13,977 |
|
|
|
441 |
|
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Compensation and benefits |
|
7,853 |
|
|
|
7,564 |
|
|
|
289 |
|
|
|
3.8 |
% |
|
Other |
|
4,742 |
|
|
|
4,740 |
|
|
|
2 |
|
|
|
0.0 |
% |
|
Total operating expenses |
|
12,595 |
|
|
|
12,304 |
|
|
|
291 |
|
|
|
2.4 |
% |
|
|
|
|
|
|
|
|
|
|
Operating profit: |
|
|
|
|
|
|
|
|
U.S. Domestic Package |
|
1,102 |
|
|
|
1,024 |
|
|
|
78 |
|
|
|
7.6 |
% |
|
International Package |
|
574 |
|
|
|
498 |
|
|
|
76 |
|
|
|
15.3 |
% |
|
Supply Chain & Freight |
|
147 |
|
|
|
151 |
|
|
|
(4 |
) |
|
|
-2.6 |
% |
|
Total operating profit |
|
1,823 |
|
|
|
1,673 |
|
|
|
150 |
|
|
|
9.0 |
% |
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Investment income and other |
|
17 |
|
|
|
4 |
|
|
|
13 |
|
|
|
N/A |
|
|
Interest expense |
|
(93 |
) |
|
|
(87 |
) |
|
|
(6 |
) |
|
|
6.9 |
% |
|
Total other income (expense) |
|
(76 |
) |
|
|
(83 |
) |
|
|
7 |
|
|
|
-8.4 |
% |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
1,747 |
|
|
|
1,590 |
|
|
|
157 |
|
|
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
616 |
|
|
|
564 |
|
|
|
52 |
|
|
|
9.2 |
% |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
1,131 |
|
|
$ |
1,026 |
|
|
$ |
105 |
|
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
Net income as a
percentage of revenue |
|
7.8 |
% |
|
|
7.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share amounts: |
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
1.27 |
|
|
$ |
1.13 |
|
|
$ |
0.14 |
|
|
|
12.4 |
% |
|
Diluted earnings per share |
$ |
1.27 |
|
|
$ |
1.12 |
|
|
$ |
0.15 |
|
|
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
889 |
|
|
|
906 |
|
|
|
(17 |
) |
|
|
-1.9 |
% |
|
Diluted |
|
894 |
|
|
|
913 |
|
|
|
(19 |
) |
|
|
-2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31 |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
|
|
Revenue (in
millions): |
|
|
|
|
|
|
|
|
U.S. Domestic
Package: |
|
|
|
|
|
|
|
|
Next Day Air |
$ |
1,575 |
|
|
$ |
1,557 |
|
|
$ |
18 |
|
|
|
1.2 |
% |
|
Deferred |
|
915 |
|
|
|
896 |
|
|
|
19 |
|
|
|
2.1 |
% |
|
Ground |
|
6,594 |
|
|
|
6,361 |
|
|
|
233 |
|
|
|
3.7 |
% |
|
Total U.S. Domestic Package |
|
9,084 |
|
|
|
8,814 |
|
|
|
270 |
|
|
|
3.1 |
% |
|
International
Package: |
|
|
|
|
|
|
|
|
Domestic |
|
574 |
|
|
|
605 |
|
|
|
(31 |
) |
|
|
-5.1 |
% |
|
Export |
|
2,203 |
|
|
|
2,200 |
|
|
|
3 |
|
|
|
0.1 |
% |
|
Cargo and Other |
|
137 |
|
|
|
165 |
|
|
|
(28 |
) |
|
|
-17.0 |
% |
|
Total International Package |
|
2,914 |
|
|
|
2,970 |
|
|
|
(56 |
) |
|
|
-1.9 |
% |
|
Supply Chain &
Freight: |
|
|
|
|
|
|
|
|
Forwarding and Logistics |
|
1,586 |
|
|
|
1,330 |
|
|
|
256 |
|
|
|
19.2 |
% |
|
Freight |
|
656 |
|
|
|
710 |
|
|
|
(54 |
) |
|
|
-7.6 |
% |
|
Other |
|
178 |
|
|
|
153 |
|
|
|
25 |
|
|
|
16.3 |
% |
|
Total Supply Chain &
Freight |
|
2,420 |
|
|
|
2,193 |
|
|
|
227 |
|
|
|
10.4 |
% |
|
Consolidated |
$ |
14,418 |
|
|
$ |
13,977 |
|
|
$ |
441 |
|
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
Consolidated volume (in
millions) |
|
1,141 |
|
|
|
1,101 |
|
|
|
40 |
|
|
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
Operating weekdays |
|
64 |
|
|
|
63 |
|
|
|
1 |
|
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
Average Daily
Package Volume (in thousands): |
|
|
|
|
|
|
|
|
|
|
U.S. Domestic
Package: |
|
|
|
|
|
|
|
|
Next Day Air |
|
1,266 |
|
|
|
1,229 |
|
|
|
37 |
|
|
|
3.0 |
% |
|
Deferred |
|
1,196 |
|
|
|
1,218 |
|
|
|
(22 |
) |
|
|
-1.8 |
% |
|
Ground |
|
12,725 |
|
|
|
12,321 |
|
|
|
404 |
|
|
|
3.3 |
% |
|
Total U.S. Domestic Package |
|
15,187 |
|
|
|
14,768 |
|
|
|
419 |
|
|
|
2.8 |
% |
|
International
Package: |
|
|
|
|
|
|
|
|
Domestic |
|
1,517 |
|
|
|
1,577 |
|
|
|
(60 |
) |
|
|
-3.8 |
% |
|
Export |
|
1,130 |
|
|
|
1,125 |
|
|
|
5 |
|
|
|
0.4 |
% |
|
Total International Package |
|
2,647 |
|
|
|
2,702 |
|
|
|
(55 |
) |
|
|
-2.0 |
% |
|
Consolidated |
|
17,834 |
|
|
|
17,470 |
|
|
|
364 |
|
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
Average Revenue
Per Piece: |
|
|
|
|
|
|
|
|
U.S. Domestic
Package: |
|
|
|
|
|
|
|
|
Next Day Air |
$ |
19.44 |
|
|
$ |
20.11 |
|
|
$ |
(0.67 |
) |
|
|
-3.3 |
% |
|
Deferred |
|
11.95 |
|
|
|
11.68 |
|
|
|
0.27 |
|
|
|
2.3 |
% |
|
Ground |
|
8.10 |
|
|
|
8.19 |
|
|
|
(0.09 |
) |
|
|
-1.1 |
% |
|
Total U.S. Domestic Package |
|
9.35 |
|
|
|
9.47 |
|
|
|
(0.12 |
) |
|
|
-1.3 |
% |
|
International
Package: |
|
|
|
|
|
|
|
|
Domestic |
|
5.91 |
|
|
|
6.09 |
|
|
|
(0.18 |
) |
|
|
-3.0 |
% |
|
Export |
|
30.46 |
|
|
|
31.04 |
|
|
|
(0.58 |
) |
|
|
-1.9 |
% |
|
Total International Package |
|
16.39 |
|
|
|
16.48 |
|
|
|
(0.09 |
) |
|
|
-0.5 |
% |
|
Consolidated |
$ |
10.39 |
|
|
$ |
10.56 |
|
|
$ |
(0.17 |
) |
|
|
-1.6 |
% |
|
|
|
|
|
|
|
|
|
|
Certain
prior year amounts have been reclassified to conform to the current
year presentation. |
|
|
|
|
|
Preliminary |
|
|
Year-to-Date |
|
(amounts in
millions) |
|
March 31 |
|
Net cash from
operations |
|
$ |
2,670 |
|
|
Capital
expenditures |
|
|
(427 |
) |
|
Proceeds from disposals
of PP&E |
|
|
3 |
|
|
Net change in finance
receivables |
|
|
(20 |
) |
|
Other investing
activities |
|
|
(33 |
) |
|
Free cash flow |
|
$ |
2,193 |
|
|
|
|
|
|
|
|
Amounts are subject to
reclassification. |
|
|
|
Contacts:
Steve Gaut, Public Relations
404-828-8787
Joe Wilkins, Investor Relations
404-828-8209
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Aug 2024 to Sep 2024
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Sep 2023 to Sep 2024