UPS Releases 1Q 2024 Earnings
- Consolidated revenues decreased by 5.3% to $21.7B compared to the previous year.
- Operating profit decreased by 36.5% to $1.6B.
- Diluted EPS were $1.30, with adjusted diluted EPS at $1.43, a 35.0% decrease from 1Q 2023.
- The company reaffirmed its full-year 2024 financial guidance with consolidated revenue expected to range from approximately $92.0B to $94.5B.
- Consolidated adjusted operating margin is projected to range from approximately 10.0% to 10.6%.
- Revenue across segments saw declines, with the U.S. Domestic Segment revenue down by 5.0% and the International Segment revenue down by 6.3%.
- Operating profit for Supply Chain Solutions decreased by 41.8% to $132M.
- UPS incurred charges of $110M in 1Q 2024, impacting diluted EPS.
- CEO Carol Tomé highlighted the company's performance and expressed optimism for future growth.
- The company's outlook includes a focus on returning to volume and revenue growth.
- A conference call discussing the results is scheduled for April 23, 2024, at 8:30 a.m. ET.
- Consolidated revenues declined by 5.3% compared to the previous year.
- Operating profit saw a significant decrease of 36.5%.
- Diluted EPS dropped by 40.9% from 1Q 2023.
- Revenue for the U.S. Domestic Segment decreased by 5.0%.
- Operating profit for the International Segment decreased by 3.1%.
- Supply Chain Solutions operating profit declined by 41.8%.
- Charges of $110M impacted the company's 1Q 2024 financials.
- The company's financial performance was below expectations.
- Market rate declines in forwarding affected Supply Chain Solutions revenue.
- GAAP results include charges related to the consolidation of acquired brands within the healthcare portfolio.
Insights
-
Consolidated Revenues of
, Compared to$21.7B Last Year$22.9B -
Consolidated Operating Margin of
7.4% ; Adjusted* Consolidated Operating Margin of8.0% -
Diluted EPS of
; Adj. Diluted EPS of$1.30 , Compared to$1.43 Last Year$2.20 - Reaffirms Full-Year 2024 Financial Guidance
For the first quarter of 2024, GAAP results include a total charge of
“I want to thank all UPSers for their hard work and efforts,” said Carol Tomé, UPS chief executive officer. “Our financial performance in the first quarter was in line with our expectations, and average daily volume in the
|
1Q 2024 |
Adjusted
|
1Q 2023 |
Adjusted
|
Revenue |
|
|
|
|
Operating profit |
|
|
|
|
-
Revenue decreased
5.0% , driven by a3.2% decrease in average daily volume. -
Operating margin was
5.8% ; adjusted operating margin was5.9% .
International Segment
|
1Q 2024 |
Adjusted
|
1Q 2023 |
Adjusted
|
Revenue |
|
|
|
|
Operating profit |
|
|
|
|
-
Revenue decreased
6.3% , driven by a5.8% decrease in average daily volume. -
Operating margin was
15.4% ; adjusted operating margin was16.0% .
Supply Chain Solutions1
|
1Q 2024 |
Adjusted
|
1Q 2023 |
Adjusted
|
Revenue |
|
|
|
|
Operating profit |
|
|
|
|
1 Consists of operating segments that do not meet the criteria of a reportable segment under ASC Topic 280 – Segment Reporting. |
-
Revenue decreased
5.3% primarily due to market rate declines in forwarding. -
Operating margin was
4.1% ; adjusted operating margin was7.0% .
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 reaffirms its full-year, consolidated financial targets:
-
Consolidated revenue to range from approximately
to$92.0 billion $94.5 billion -
Consolidated adjusted operating margin to range from approximately
10.0% to10.6% -
Capital expenditures of approximately
$4.5 billion
* “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.
Conference Call Information
UPS CEO Carol Tomé and CFO Brian Newman will discuss first-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, April 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
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
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.
Incentive Compensation Program Design Changes
During 2022, we completed certain structural changes to the design of our incentive compensation programs that resulted in a one-time, non-cash charge in connection with the accelerated vesting of certain equity incentive awards that we do not expect to repeat. 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 these changes. We believe excluding the impacts of such changes allows users of our financial statements to more appropriately identify underlying growth trends in compensation and benefits expense.
Long-lived Asset Estimated Residual Value Changes
During the fourth quarter of 2022, we incurred a one-time, non-cash charge resulting from a reduction in the estimated residual value of our MD-11 fleet. 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 this charge. We believe excluding the impact of this charge better enables users of our financial statements to understand the ongoing cost associated with our long-lived assets.
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
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, 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.
Reconciliation of GAAP and Non-GAAP Income Statement Items (in millions, except per share data): |
|||||||||||||
|
|||||||||||||
Three Months Ended March 31, 2024 |
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
As Reported
|
|
Asset
|
|
Transformation
|
|
As Adjusted
|
||||||
|
$ |
13,409 |
|
|
$ |
5 |
|
$ |
9 |
|
$ |
13,395 |
|
International Package |
|
3,600 |
|
|
|
2 |
|
|
24 |
|
|
3,574 |
|
Supply Chain Solutions |
|
3,084 |
|
|
|
41 |
|
|
53 |
|
|
2,990 |
|
Operating Expense |
|
20,093 |
|
|
|
48 |
|
|
86 |
|
|
19,959 |
|
|
|
|
|
|
|
|
|
||||||
|
|
825 |
|
|
|
5 |
|
|
9 |
|
|
839 |
|
International Package |
|
656 |
|
|
|
2 |
|
|
24 |
|
|
682 |
|
Supply Chain Solutions |
|
132 |
|
|
|
41 |
|
|
53 |
|
|
226 |
|
Operating Profit |
|
1,613 |
|
|
|
48 |
|
|
86 |
|
|
1,747 |
|
|
|
|
|
|
|
|
|
||||||
Other Income and (Expense): |
|
|
|
|
|
|
|
||||||
Other pension income (expense) |
|
67 |
|
|
|
— |
|
|
— |
|
|
67 |
|
Investment income (expense) and other |
|
51 |
|
|
|
— |
|
|
— |
|
|
51 |
|
Interest expense |
|
(195 |
) |
|
|
— |
|
|
— |
|
|
(195 |
) |
Total Other Income (Expense) |
|
(77 |
) |
|
|
— |
|
|
— |
|
|
(77 |
) |
|
|
|
|
|
|
|
|
||||||
Income Before Income Taxes |
|
1,536 |
|
|
|
48 |
|
|
86 |
|
|
1,670 |
|
Income Tax Expense |
|
423 |
|
|
|
13 |
|
|
11 |
|
|
447 |
|
Net Income |
$ |
1,113 |
|
|
$ |
35 |
|
$ |
75 |
|
$ |
1,223 |
|
|
|
|
|
|
|
|
|
||||||
Basic Earnings Per Share |
$ |
1.30 |
|
|
$ |
0.04 |
|
$ |
0.09 |
|
$ |
1.43 |
|
|
|
|
|
|
|
|
|
||||||
Diluted Earnings Per Share |
$ |
1.30 |
|
|
$ |
0.04 |
|
$ |
0.09 |
|
$ |
1.43 |
|
|
|
|
|
|
|
|
|
(1) Reflects impairment charges of |
(2) Reflects other employee benefits costs of |
Reconciliation of Free Cash Flow (Non-GAAP measure) (in millions): |
||||
|
|
|
||
Three Months Ended March 31, |
||||
|
|
|
2024 |
|
Cash flows from operating activities |
|
$ |
3,316 |
|
Capital expenditures |
|
|
(1,035 |
) |
Proceeds from disposals of property, plant and equipment |
|
|
13 |
|
Other investing activities |
|
|
(14 |
) |
Free Cash Flow (Non-GAAP measure) |
|
$ |
2,280 |
|
Reconciliation of Adjusted Debt to Adjusted EBITDA (Non-GAAP measure) (in millions): |
|||||
|
|
|
|
||
|
|
|
TTM(1) Ended |
||
|
|
|
March 31, |
||
|
|
|
|
2024 |
|
Net income |
|
|
$ |
5,926 |
|
Add back: |
|
|
|
||
Income tax expense |
|
|
|
1,661 |
|
Interest expense |
|
|
|
794 |
|
Depreciation & amortization |
|
|
|
3,430 |
|
EBITDA |
|
|
$ |
11,811 |
|
Add back (deduct): |
|
|
|
||
Incentive compensation program redesign |
|
|
|
— |
|
One-time compensation |
|
|
|
61 |
|
Asset impairment charges |
|
|
|
276 |
|
Transformation and other |
|
|
|
518 |
|
Defined benefit plan (gains) and losses |
|
|
|
359 |
|
Investment income and other pension income |
|
|
|
(527 |
) |
Adjusted EBITDA |
|
|
$ |
12,498 |
|
|
|
|
|
||
Debt and finance leases, including current maturities |
|
|
$ |
20,013 |
|
Add back: |
|
|
|
||
Non-current pension and postretirement benefit obligations |
|
|
|
6,323 |
|
Adjusted total debt |
|
|
$ |
26,336 |
|
|
|
|
|
||
Adjusted total debt/Net income |
|
|
|
4.44 |
|
|
|
|
|
||
Adjusted total debt/adjusted EBITDA (Non-GAAP) |
|
|
|
2.11 |
|
(1) Trailing twelve months. |
Reconciliation of Adjusted Return on Invested Capital (Non-GAAP measure) (in millions): |
||||
|
|
|
||
|
|
TTM(1) Ended |
||
|
|
March 31, |
||
|
|
|
2024 |
|
Net income |
|
$ |
5,926 |
|
Add back (deduct): |
|
|
||
Income tax expense |
|
|
1,661 |
|
Interest expense |
|
|
794 |
|
Other pension (income) expense |
|
|
94 |
|
Investment (income) expense and other |
|
|
(262 |
) |
Operating profit |
|
$ |
8,213 |
|
Incentive compensation program redesign |
|
|
— |
|
Long-lived asset estimated residual value changes |
|
|
— |
|
One-time compensation |
|
|
61 |
|
Asset impairment charges |
|
|
276 |
|
Transformation and other |
|
|
518 |
|
Adjusted operating profit |
|
$ |
9,068 |
|
|
|
|
||
Average debt and finance leases, including current maturities |
|
|
21,101 |
|
Average pension and postretirement benefit obligations |
|
|
5,463 |
|
Average shareowners' equity |
|
|
18,493 |
|
Average invested capital |
|
$ |
45,057 |
|
|
|
|
||
Net income to average invested capital |
|
|
13.2 |
% |
|
|
|
||
Adjusted Return on Invested Capital (Non-GAAP) |
|
|
20.1 |
% |
(1) Trailing twelve months. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240423404147/en/
UPS Media Relations: 404-828-7123 or pr@ups.com
UPS Investor Relations: 404-828-6059 (option 4) or investor@ups.com
Source: UPS
FAQ
What were UPS's 1Q 2024 consolidated revenues?
What was the operating profit for UPS in 1Q 2024?
What was the diluted EPS for UPS in 1Q 2024?
What is UPS's full-year 2024 financial guidance for consolidated revenue?
What is the projected range for UPS's consolidated adjusted operating margin in 2024?