UPS Releases 2Q 2024 Earnings
-
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
For the second quarter of 2024, GAAP results include an after-tax charge of
“I want to thank all UPSers for their hard work and efforts in the second quarter,” said Carol Tomé,
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2Q 2024 |
Adjusted 2Q 2024 |
2Q 2023 |
Adjusted 2Q 2023 |
Revenue |
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Operating profit |
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- 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
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2Q 2024 |
Adjusted 2Q 2024 |
2Q 2023 |
Adjusted 2Q 2023 |
Revenue |
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Operating profit |
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- 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%.
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2Q 2024 |
Adjusted 2Q 2024 |
2Q 2023 |
Adjusted 2Q 2023 |
Revenue |
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Operating profit |
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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,
-
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
About
Forward-Looking Statements
This release, our Annual Report on Form 10-K for the year ended
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
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
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
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
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): |
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Three Months Ended |
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|
|
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|
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||||||
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As Reported
|
|
One-Time Int'l Regulatory
|
|
Transformation &
|
|
As Adjusted
|
||||||
|
$ |
13,130 |
|
|
$ |
— |
|
$ |
8 |
|
$ |
13,122 |
|
International Package |
|
3,652 |
|
|
|
88 |
|
|
18 |
|
|
3,546 |
|
|
|
3,092 |
|
|
|
— |
|
|
6 |
|
|
3,086 |
|
Operating Expense |
|
19,874 |
|
|
|
88 |
|
|
32 |
|
|
19,754 |
|
|
|
|
|
|
|
|
|
||||||
|
|
989 |
|
|
|
— |
|
|
8 |
|
|
997 |
|
International Package |
|
718 |
|
|
|
88 |
|
|
18 |
|
|
824 |
|
|
|
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 |
|
|
|
|
|
|
|
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|
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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 |
(2) Reflects other employee benefits costs of |
|
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Reconciliation of GAAP and Non-GAAP Income Statement Items (in millions, except per share data): |
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Six Months Ended |
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|
|
|
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|
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As Reported
|
|
One-Time Int'l
|
|
Asset
|
|
Transformation &
|
|
As Adjusted
|
|||||||
|
$ |
26,539 |
|
|
$ |
— |
|
$ |
5 |
|
$ |
17 |
|
$ |
26,517 |
|
International Package |
|
7,252 |
|
|
|
88 |
|
|
2 |
|
|
42 |
|
|
7,120 |
|
|
|
6,176 |
|
|
|
— |
|
|
41 |
|
|
59 |
|
|
6,076 |
|
Operating Expense |
|
39,967 |
|
|
|
88 |
|
|
48 |
|
|
118 |
|
|
39,713 |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
1,814 |
|
|
|
— |
|
|
5 |
|
|
17 |
|
|
1,836 |
|
International Package |
|
1,374 |
|
|
|
88 |
|
|
2 |
|
|
42 |
|
|
1,506 |
|
|
|
369 |
|
|
|
— |
|
|
41 |
|
|
59 |
|
|
469 |
|
Operating Profit |
|
3,557 |
|
|
|
88 |
|
|
48 |
|
|
118 |
|
|
3,811 |
|
|
|
|
|
|
|
|
|
|
|
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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 |
|
|
|
|
|
|
|
|
|
|
|
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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 |
(2) Reflects impairment charges of |
(3) Reflects other employee benefits costs of |
|
|
Reconciliation of Free Cash Flow (Non-GAAP measure) (in millions): |
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|
|
|
||
Six Months Ended |
||||
|
|
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): |
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|
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|
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|
TTM(1) Ended |
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|
|
|
|
||
|
|
|
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 (in millions): |
||||
|
|
|
||
|
|
TTM(1) Ended |
||
|
|
|
||
|
|
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 |
|
|
18.0 |
% |
(1) Trailing twelve months. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240723590067/en/
UPS Media Relations: 404-828-7123 or pr@ups.com
UPS Investor Relations: 404-828-6059 (option 4) or investor@ups.com
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