- Consolidated Revenues of $21.8B, Compared to $22.1B Last
Year
- Consolidated Operating Margin of 8.9%; Adjusted*
Consolidated Operating Margin of 9.5%
- Diluted EPS of $1.65; Adj. Diluted EPS of $1.79, Compared to
$2.54 Last Year
- Updates Full-Year 2024 Financial Guidance; Restarts Share
Repurchase Program, Targeting $1B Annually
UPS (NYSE:UPS) today announced second-quarter 2024 consolidated
revenues of $21.8 billion, a 1.1% decrease from the second quarter
of 2023. Consolidated operating profit was $1.9 billion, down 30.1%
compared to the second quarter of 2023, and down 29.3% on an
adjusted basis. Diluted earnings per share were $1.65 for the
quarter; adjusted diluted earnings per share of $1.79 were 29.5%
below the same period in 2023.
For the second quarter of 2024, GAAP results include an
after-tax charge of $120 million, or $0.14 per diluted share,
comprised of a one-time payment of $94 million to settle an
international regulatory matter, and transformation and other
charges of $26 million.
“I want to thank all UPSers for their hard work and efforts in
the second quarter,” said Carol Tomé, UPS chief executive officer.
“This quarter was a significant turning point for our company as we
returned to volume growth in the U.S., the first time in nine
quarters. As expected, our operating profit declined in the first
half of 2024 from what we reported last year. Going forward we
expect to return to operating profit growth.”
U.S. Domestic Segment
2Q
2024
Adjusted
2Q
2024
2Q
2023
Adjusted
2Q
2023
Revenue
$14,119 M
$14,396 M
Operating profit
$989 M
$997 M
$1,602 M
$1,681 M
- Revenue decreased 1.9%, driven by a 2.6% decrease in revenue
per piece due primarily to changes in product mix.
- Operating margin was 7.0%; adjusted operating margin was
7.1%.
International Segment
2Q
2024
Adjusted
2Q
2024
2Q
2023
Adjusted
2Q
2023
Revenue
$4,370 M
$4,415 M
Operating profit
$718 M
$824 M
$883 M
$902 M
- Revenue decreased 1.0%, driven primarily by a 2.9% decrease in
average daily volume.
- Operating margin was 16.4%; adjusted operating margin was
18.9%.
Supply Chain Solutions1
2Q
2024
Adjusted
2Q
2024
2Q
2023
Adjusted
2Q
2023
Revenue
$3,329 M
$3,244 M
Operating profit
$237 M
$243 M
$295 M
$336 M
1 Consists of operating segments that do
not meet the criteria of a reportable segment under ASC Topic 280 –
Segment Reporting.
- Revenue increased 2.6% due primarily to growth in logistics,
including healthcare.
- Operating margin was 7.1%; adjusted operating margin was
7.3%.
2024 Outlook
The company provides certain guidance on an adjusted (non-GAAP)
basis because it is not possible to predict or provide a
reconciliation reflecting the impact of future pension adjustments
or other unanticipated events, which would be included in reported
(GAAP) results and could be material.
For 2024, UPS updates its full-year, consolidated financial
targets**:
- Consolidated revenue expected to be approximately $93.0
billion
- Consolidated adjusted operating margin expected to be
approximately 9.4%
- Capital expenditures of approximately $4.0 billion
- Targeting around $500 million in share repurchases
* “Adjusted” or “Adj.” amounts are
non-GAAP financial measures. See the appendix to this release for a
discussion of non-GAAP financial measures, including a
reconciliation to the most closely correlated GAAP measure.
**Excludes the impacts of pending
disposition of Coyote and announced acquisition.
Conference Call
Information
UPS CEO Carol Tomé and CFO Brian Dykes will discuss
second-quarter results with investors and analysts during a
conference call at 8:30 a.m. ET, July 23, 2024. That call will be
open to others through a live Webcast. To access the call, go to
www.investors.ups.com and click on “Earnings Conference Call.”
Additional financial information is included in the detailed
financial schedules being posted on www.investors.ups.com under
“Quarterly Earnings and Financials” and as furnished to the SEC as
an exhibit to our Current Report on Form 8-K.
About UPS
UPS (NYSE: UPS) is one of the world’s largest companies, with
2023 revenue of $91.0 billion, and provides a broad range of
integrated logistics solutions for customers in more than 200
countries and territories. Focused on its purpose statement,
“Moving our world forward by delivering what matters,” the
company’s approximately 500,000 employees embrace a strategy that
is simply stated and powerfully executed: Customer First. People
Led. Innovation Driven. UPS is committed to reducing its impact on
the environment and supporting the communities we serve around the
world. UPS also takes an unwavering stance in support of diversity,
equity and inclusion. More information can be found at www.ups.com,
about.ups.com and www.investors.ups.com.
Forward-Looking
Statements
This release, our Annual Report on Form 10-K for the year ended
December 31, 2023 and our other filings with the Securities and
Exchange Commission contain and in the future may contain
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Statements other than
those of current or historical fact, and all statements accompanied
by terms such as “will,” “believe,” “project,” “expect,”
“estimate,” “assume,” “intend,” “anticipate,” “target,” “plan,” and
similar terms, are intended to be forward-looking statements.
Forward-looking statements are made subject to the safe harbor
provisions of the federal securities laws pursuant to Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.
From time to time, we also include written or oral
forward-looking statements in other publicly disclosed materials.
Forward-looking statements may relate to our intent, belief,
forecasts of, or current expectations about our strategic
direction, prospects, future results, or future events; they do not
relate strictly to historical or current facts. Management believes
that these forward-looking statements are reasonable as and when
made. However, caution should be taken not to place undue reliance
on any forward-looking statements because such statements speak
only as of the date when made and the future, by its very nature,
cannot be predicted with certainty.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from our historical experience and our present expectations or
anticipated results. These risks and uncertainties include, but are
not limited to: changes in general economic conditions in the U.S.
or internationally; significant competition on a local, regional,
national and international basis; changes in our relationships with
our significant customers; our ability to attract and retain
qualified employees; strikes, work stoppages or slowdowns by our
employees; increased or more complex physical or operational
security requirements; a significant cybersecurity incident, or
increased data protection regulations; our ability to maintain our
brand image and corporate reputation; impacts from global climate
change; interruptions in or impacts on our business from natural or
man-made events or disasters including terrorist attacks, epidemics
or pandemics; exposure to changing economic, political, regulatory
and social developments in international and emerging markets; our
ability to realize the anticipated benefits from acquisitions,
dispositions, joint ventures or strategic alliances; the effects of
changing prices of energy, including gasoline, diesel, jet fuel,
other fuels and interruptions in supplies of these commodities;
changes in exchange rates or interest rates; our ability to
accurately forecast our future capital investment needs; increases
in our expenses or funding obligations relating to employee health,
retiree health and/or pension benefits; our ability to manage
insurance and claims expenses; changes in business strategy,
government regulations or economic or market conditions that may
result in impairments of our assets; potential additional U.S. or
international tax liabilities; increasingly stringent regulations
related to climate change; potential claims or litigation related
to labor and employment, personal injury, property damage, business
practices, environmental liability and other matters; and other
risks discussed in our filings with the Securities and Exchange
Commission from time to time, including our Annual Report on Form
10-K for the year ended December 31, 2023, and subsequently filed
reports. You should consider the limitations on, and risks
associated with, forward-looking statements and not unduly rely on
the accuracy of predictions contained in such forward-looking
statements. We do not undertake any obligation to update
forward-looking statements to reflect events, circumstances,
changes in expectations, or the occurrence of unanticipated events
after the date of those statements, except as required by law.
From time to time, we expect to participate in analyst and
investor conferences. Materials provided or displayed at those
conferences, such as slides and presentations, may be posted on our
investor relations website at www.investors.ups.com under the
heading "Presentations" when made available. These presentations
may contain new material nonpublic information about our company
and you are encouraged to monitor this site for any new posts, as
we may use this mechanism as a public announcement.
Reconciliation of GAAP and Non-GAAP
Financial Measures
We supplement the reporting of our financial information
determined under generally accepted accounting principles ("GAAP")
with certain non-GAAP financial measures.
Adjusted financial measures should be considered in addition to,
and not as an alternative for, our reported results prepared in
accordance with GAAP. Our adjusted financial measures do not
represent a comprehensive basis of accounting and therefore may not
be comparable to similarly titled measures reported by other
companies.
Forward-Looking Non-GAAP Metrics
From time to time when presenting forward-looking non-GAAP
metrics, we are unable to provide quantitative reconciliations to
the most closely correlated GAAP measure due to the uncertainty in
the timing, amount or nature of any adjustments, which could be
material in any period.
One-Time Payment for International Regulatory Matter
In the second quarter of 2024, we made a one-time payment of $94
million of previously restricted cash to settle a
previously-disclosed challenge by Italian tax authorities to the
deductibility of Value Added Tax payments by UPS to certain
third-party service providers, a review of which was launched in
the fourth quarter of 2023. We supplement the presentation of our
operating profit, operating margin, interest expense, total other
income (expense), income before income taxes, net income and
earnings per share with non-GAAP measures that exclude the impact
of this payment. We believe excluding the impact of this payment,
which we do not believe is a component of our ongoing operations
and we do not expect to recur, better enables users of our
financial statements to view and evaluate underlying business
performance from the same perspective as management.
Transformation and Other Costs, and Asset Impairment Charges
We supplement the presentation of our operating profit,
operating margin, income before income taxes, net income and
earnings per share with non-GAAP measures that exclude the impact
of charges related to transformation activities, asset impairments
and other charges. We believe excluding the impact of these charges
better enables users of our financial statements to view and
evaluate underlying business performance from the perspective of
management. We do not consider these costs when evaluating the
operating performance of our business units, making decisions to
allocate resources or in determining incentive compensation
awards.
One-Time Compensation Payment
We supplement the presentation of our operating profit,
operating margin, income before income taxes, net income and
earnings per share with non-GAAP measures that exclude the impact
of a one-time payment made to certain U.S.-based, non-union
part-time supervisors following the ratification of our labor
agreement with the Teamsters. We do not expect this or similar
payments to recur. We believe excluding the impact of this one-time
payment better enables users of our financial statements to view
and evaluate underlying business performance from the same
perspective as management.
Defined Benefit Pension and Postretirement Medical Plan Gains
and Losses
We recognize changes in the fair value of plan assets and net
actuarial gains and losses in excess of a 10% corridor (defined as
10% of the greater of the fair value of plan assets or the plan's
projected benefit obligation), as well as gains and losses
resulting from plan curtailments and settlements, for our pension
and postretirement defined benefit plans immediately as part of
Investment income (expense) and other in the statements of
consolidated income. We supplement the presentation of our income
before income taxes, net income and earnings per share with
adjusted measures that exclude the impact of these gains and losses
and the related income tax effects. We believe excluding these
defined benefit pension and postretirement plan gains and losses
provides important supplemental information by removing the
volatility associated with plan amendments and short-term changes
in market interest rates, equity values and similar factors.
Free Cash Flow
We calculate free cash flow as cash flows from operating
activities less capital expenditures, proceeds from disposals of
property, plant and equipment, and plus or minus the net changes in
other investing activities. We believe free cash flow is an
important indicator of how much cash is generated by our ongoing
business operations and we use this as a measure of incremental
cash available to invest in our business, meet our debt obligations
and return cash to shareowners.
Adjusted Return on Invested Capital
Adjusted ROIC is calculated as the trailing twelve months
(“TTM”) of adjusted operating income divided by the average of
total debt, non-current pension and postretirement benefit
obligations and shareowners’ equity, at the current period end and
the corresponding period end of the prior year. Because adjusted
ROIC is not a measure defined by GAAP, we calculate it, in part,
using non-GAAP financial measures that we believe are most
indicative of our ongoing business performance. We consider
adjusted ROIC to be a useful measure for evaluating the
effectiveness and efficiency of our long-term capital
investments.
Adjusted Total Debt / Adjusted EBITDA
Adjusted total debt is defined as our long-term debt and finance
leases, including current maturities, plus non-current pension and
postretirement benefit obligations. Adjusted EBITDA is defined as
earnings before interest, taxes, depreciation and amortization
adjusted for the impacts of incentive compensation program
redesign, one-time compensation, goodwill & asset impairment
charges, transformation and other costs, a one-time international
regulatory matter, defined benefit plan gains and losses and other
income. We believe the ratio of adjusted total debt to adjusted
EBITDA is an important indicator of our financial strength, and is
a ratio used by third parties when evaluating the level of our
indebtedness.
Adjusted Cost per Piece
We evaluate the efficiency of our operations using various
metrics, including adjusted cost per piece. Adjusted cost per piece
is calculated as adjusted operating expenses in a period divided by
total volume for that period. Because adjusted operating expenses
exclude costs or charges that we do not consider a part of
underlying business performance when monitoring and evaluating the
operating performance of our business units, making decisions to
allocate resources or in determining incentive compensation awards,
we believe this is the appropriate metric on which to base reviews
and evaluations of the efficiency of our operational
performance.
Reconciliation of GAAP and
Non-GAAP Income Statement Items
(in millions, except per share
data):
Three Months Ended June 30,
2024
As Reported (GAAP)
One-Time Int'l Regulatory
Matter(1)
Transformation & Other
Adj.(2)
As Adjusted
(Non-GAAP)
U.S. Domestic Package
$
13,130
$
—
$
8
$
13,122
International Package
3,652
88
18
3,546
Supply Chain Solutions
3,092
—
6
3,086
Operating Expense
19,874
88
32
19,754
U.S. Domestic Package
989
—
8
997
International Package
718
88
18
824
Supply Chain Solutions
237
—
6
243
Operating Profit
1,944
88
32
2,064
Other Income and (Expense):
Other pension income (expense)
67
—
—
67
Investment income (expense) and other
70
—
—
70
Interest expense
(212
)
6
—
(206
)
Total Other Income (Expense)
(75
)
6
—
(69
)
Income Before Income Taxes
1,869
94
32
1,995
Income Tax Expense
460
—
6
466
Net Income
$
1,409
$
94
$
26
$
1,529
Basic Earnings Per Share
$
1.65
$
0.11
$
0.03
$
1.79
Diluted Earnings Per Share
$
1.65
$
0.11
$
0.03
$
1.79
(1) Reflects a one-time payment for an
international regulatory matter and related interest of $94
million.
(2) Reflects other employee benefits costs
of $20 million and $12 million of other costs.
Reconciliation of GAAP and
Non-GAAP Income Statement Items
(in millions, except per share
data):
Six Months Ended June 30,
2024
As Reported (GAAP)
One-Time Int'l Regulatory
Matter(1)
Asset Impairment
Charges(2)
Transformation & Other
Adj.(3)
As Adjusted
(Non-GAAP)
U.S. Domestic Package
$
26,539
$
—
$
5
$
17
$
26,517
International Package
7,252
88
2
42
7,120
Supply Chain Solutions
6,176
—
41
59
6,076
Operating Expense
39,967
88
48
118
39,713
U.S. Domestic Package
1,814
—
5
17
1,836
International Package
1,374
88
2
42
1,506
Supply Chain Solutions
369
—
41
59
469
Operating Profit
3,557
88
48
118
3,811
Other Income and (Expense):
Other pension income (expense)
134
—
—
—
134
Investment income (expense) and other
121
—
—
—
121
Interest expense
(407
)
6
—
—
(401
)
Total Other Income (Expense)
(152
)
6
—
—
(146
)
Income Before Income Taxes
3,405
94
48
118
3,665
Income Tax Expense
883
—
13
17
913
Net Income
$
2,522
$
94
$
35
$
101
$
2,752
Basic Earnings Per Share
$
2.95
$
0.11
$
0.04
$
0.11
$
3.21
Diluted Earnings Per Share
$
2.94
$
0.11
$
0.04
$
0.12
$
3.21
(1) Reflects a one-time payment for an
international regulatory matter and related interest of $94
million.
(2) Reflects impairment charges of $41
million for acquired trade names within Supply Chain Solutions and
$7 million for software licenses.
(3) Reflects other employee benefits costs
of $51 million and $67 million of other costs, including a one-time
expense related to a regulatory matter.
Reconciliation of Free Cash
Flow (Non-GAAP measure)
(in millions):
Six Months Ended June
30,
2024
Cash flows from operating activities
$
5,309
Capital expenditures
(1,968
)
Proceeds from disposals of property, plant
and equipment
28
Other investing activities
(4
)
Free Cash Flow (Non-GAAP measure)
$
3,365
Reconciliation of Adjusted
Debt to Adjusted EBITDA (Non-GAAP measure)
(in millions):
TTM(1) Ended
June 30,
2024
Net income
$
5,254
Add back:
Income tax expense
1,482
Interest expense
815
Depreciation & amortization
3,489
EBITDA
11,040
Add back (deduct):
Incentive compensation program
redesign
—
One-time compensation
61
Asset impairment charges
276
Transformation and other
411
Defined benefit plan (gains) and
losses
359
Investment income and other pension
income
(533
)
One-time international regulatory
matter
88
Adjusted EBITDA
$
11,702
Debt and finance leases, including current
maturities
$
22,205
Add back:
Non-current pension and postretirement
benefit obligations
6,449
Adjusted total debt
$
28,654
Adjusted total debt/Net income
5.45
Adjusted total debt/adjusted EBITDA
(Non-GAAP)
2.45
(1) Trailing twelve months.
Reconciliation of Adjusted
Return on Invested Capital (Non-GAAP measure)
(in millions):
TTM(1) Ended
June 30,
2024
Net income
$
5,254
Add back (deduct):
Income tax expense
1,482
Interest expense
815
Other pension (income) expense
93
Investment (income) expense and other
(267
)
Operating profit
$
7,377
Incentive compensation program
redesign
—
Long-lived asset estimated residual value
changes
—
One-time compensation
61
Asset impairment charges
276
Transformation and other
411
One-time international regulatory
matter
88
Adjusted operating profit
$
8,213
Average debt and finance leases, including
current maturities
$
21,484
Average pension and postretirement benefit
obligations
5,542
Average shareowners' equity
18,545
Average invested capital
$
45,571
Net income to average invested capital
11.5
%
Adjusted Return on Invested Capital
(Non-GAAP)
18.0
%
(1) Trailing twelve months.
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