News Release Details

UPS 2Q18 Revenue Up 9.6% On Strong Growth and Pricing

July 25, 2018
  • Reports 2Q18 EPS of $1.71, up 8.2%; Adjusted 2Q18 EPS of $1.94, up 23%
  • International Operating Profit up 8.4%; Adj. Operating Profit Climbed 15%
  • Average Daily Exports Increased 9.5%, Led by Europe
  • Supply Chain & Freight Operating Profit up 1.9%; Adjusted Operating Profit Rose 17%
  • U.S. Domestic Revenue Increased 6.3% on Higher Base Pricing
  • YTD Cash from Operations was $7.2B and Free Cash Flow Surged to $4.4B
  • Reaffirms 2018 Adjusted EPS and Raises Free Cash Flow Guidance to $5B

ATLANTA, July 25, 2018 (GLOBE NEWSWIRE) -- UPS (NYSE:UPS) today announced second-quarter diluted earnings per share growth of 8.2%, to $1.71, and adjusted diluted earnings per share growth of 23%, to $1.94.

Second-quarter 2018 adjusted results exclude a pre-tax charge of $263 million, or $0.23 per share after-tax, due to transformation costs primarily related to the Voluntary Retirement Plan (VRP).    

       
Consolidated Results 2Q 2018 Adjusted
2Q 2018
2Q 2017
Revenue $17,456 M   $15,927 M
Net Income $1,485 M $1,685 M $1,384 M
Diluted earnings per share $1.71 $1.94 $1.58
EPS Growth   8.2%   23%  
           

“UPS is making great progress on our transformation initiatives to enhance profitable growth and improve operating leverage,” said David Abney, UPS Chairman and CEO.  “We are confident that our strategies will position the company to provide improved value for customers and shareowners.” 

For the total company in 2Q 2018:

  • Consolidated revenue increased 9.6% to $17.5 billion, on growth across all segments.
  • Average yield increased 4.6%, led by International and U.S. Deferred Air products.
  • Net income increased 7.3% and adjusted net income was 22% higher than 2Q17.
  • Year-to-date cash from operations was $7.2 billion
  • Free Cash Flow surged to $4.4 billion in the first half of the year, driven primarily by transformation initiatives that improved working capital. 
  • Year-to-date dividends per share increased by 10% to $1.6 billion and share repurchases were $511 million
  • The company has made capital expenditures of $2.8 billion in the first half of 2018.

* Information on non-GAAP financial measures is attached to this press release.

U.S. Domestic Segment

The U.S. Domestic segment experienced strong revenue growth of 6.3%, driven by ecommerce demand and increased revenue per piece over the prior year.  Operating profit was primarily reduced by planned increases in pension expense and cost for ongoing network projects.

       
  2Q 2018 Adjusted
2Q 2018
2Q 2017
Revenue $10,354 M   $9,741 M
Operating profit $939 M $1,135 M $1,255 M
       

For the U.S. Domestic segment in 2Q 2018:

  • Revenue improved across all products, demonstrating robust market demand for UPS solutions.    
  • Revenue per piece increased 3.6% as higher base-rates and fuel surcharges offset headwinds from customer and product mix.
  • Adjusted operating profit excludes transformation charges of $196 million, which lowered reported operating margin by 190 basis points.

International Segment

The International segment delivered its 14th consecutive quarter of currency neutral double-digit operating profit growth.   The segment enjoyed its highest 2nd quarter operating profit ever, led by the Europe region.

       
  2Q 2018 Adjusted
2Q 2018
2Q 2017
Revenue $3,602 M   $3,171 M
Operating profit $618 M $654 M $570 M
       

For the International segment in 2Q 2018:

  • International revenue increased 14%, driven by double-digit growth in Export and Domestic.
  • Daily Export shipments increased 9.5%, led by strong growth in Europe and the U.S.
  • Operating profit was $618 million and adjusted operating profit rose 15% to $654 million.
  • Adjusted operating profit excludes transformation charges of $36 million.

Supply Chain and Freight Segment

“The Supply Chain and Freight segment delivered another quarter of double-digit growth in revenue and adjusted operating profit,” continued Abney.  “Our targeted growth strategies and improved efficiencies produced the segment’s best profit growth in its history.”

* Information on non-GAAP financial measures is attached to this press release.

       
   2Q 2018 Adjusted
2Q 2018
 2Q 2017
Revenue $3,500 M   $3,015 M
Operating profit $216 M $247 M $212 M
       

For the Supply Chain and Freight segment in 2Q 2018:

  • Revenue increased 16% to $3.5 billion, the business units are focused on leveraging UPS solutions to better serve middle-market customers. 
  • The Forwarding business led all units with 23% revenue growth, as revenue management initiatives drove top-line improvement.
  • UPS Freight revenue increased 13% on higher pricing and tonnage gains.
  • Operating profit was $216 million and adjusted operating profit was up 17% to $247 million.
  • Adjusted operating profit excludes transformation charges of $31 million.

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments or other unanticipated events, which would be included in reported (GAAP) results and could be material.

“UPS is focused on executing our strategic imperatives for improved efficiency and high-quality growth,” said Richard Peretz, UPS’s chief financial officer.  “We remain confident in our ability to achieve our full-year adjusted earnings per share target.”  

  • UPS expects 2018 adjusted diluted earnings per share in a range of $7.03 to $7.37.
  • The company raises 2018 free cash flow target to $5.0 billion.
  • The effective tax rate should be in a range of 23% to 24% for the remainder of the year.
  • Capital expenditures in 2018 are planned between $6.5 billion and $7.0 billion.

* Information on non-GAAP financial measures is attached to this press release.

Conference Call Information
           
UPS CEO David Abney and CFO Richard Peretz will discuss second-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, July 25, 2018.  That call is open to others 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 transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business.  UPS is committed to operating more sustainably – for customers, the environment and the communities we serve around the world.  Learn more about our efforts at ups.com/sustainability.  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, follow @UPS_News on Twitter.

Forward-Looking Statements

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 (including tax laws and regulations), our competitive environment, changes in the facts 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.

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, 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 periodically disclose free cash flow, free cash flow excluding discretionary pension contributions, as well as currency-neutral revenue, revenue per piece and operating profit.

We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Examples of items for which we may make adjustments include but are not limited to: amounts related to mark-to-market gains or losses (non-cash); settlement of contingencies; gains or losses associated with mergers, acquisitions, divestitures and other structural changes; charges related to restructuring programs; asset impairments (non-cash); amounts related to changes in tax regulations or positions; pension and postretirement related items; and debt modifications.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results, cash flows and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Transformation & Other

We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of transformation strategy costs.  We believe this adjusted information provides important supplemental information that provides useful comparison of year-to-year financial performance without considering the short-term impact of transformation impacts. We evaluate the performance of our businesses on an adjusted basis.

Currency-Neutral Revenue, Revenue per Piece and Operating Profit

We supplement the reporting of our revenue, revenue per piece and operating profit with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package and Supply Chain and Freight businesses on a currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived current period local currency revenue, revenue per piece and operating profit are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency revenue hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.

Free Cash Flow

We supplement the reporting of cash flows from operating activities with free cash flow and free cash flow excluding discretionary pension contributions, non-GAAP liquidity measures. We believe free cash flow is an important indicator of how much cash is generated by regular business operations and we use it as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. 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 finance receivables and other investing activities.

Reconciliation of GAAP and non-GAAP Income Statement Data
(in millions, except Per EPS amounts):

Three Months Ended June 30, 2018
             
        Transformation     
    As-Reported   Strategy   As-Adjusted 
    (GAAP)   Costs (1)   (non-GAAP)
Operating profit:            
U.S. Domestic Package   $ 939   $ 196   $ 1,135
International Package     618     36     654
Supply Chain & Freight     216     31     247
Total operating profit   $ 1,773   $ 263   $ 2,036
             
Income before income taxes $ 1,926   $ 263   $ 2,189
             
Income tax expense   $ 441     63   $ 504
             
Net income   $ 1,485   $ 200   $ 1,685
             
Diluted earnings per share   $ 1.71   $ 0.23   $ 1.94
             

(1) Transformation strategy costs include voluntary retirement plan severance costs of $192 million, and other costs of $71 million

   
Six Months Ended June 30, 2018  
               
        Transformation      
    As-Reported   Strategy   As-Adjusted   
    (GAAP)   Costs (1)   (non-GAAP)  
Operating profit:            
U.S. Domestic Package $ 1,695   $ 196   $ 1,891  
International Package   1,212     36     1,248  
Supply Chain & Freight   386     31     417  
Total operating profit $ 3,293   $ 263   $ 3,556  
               
Income before income taxes $ 3,587   $ 263   $ 3,850  
               
Income tax expense $ 757   $ 63   $ 820  
               
Net income $ 2,830   $ 200   $ 3,030  
               
Diluted earnings per share $ 3.25   $ 0.23   $ 3.48  
               

(1) Transformation strategy costs include voluntary retirement plan severance costs of $192 million, and other costs of $71 million

Note: Certain amounts may not compute due to rounding.

                         
Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and As-Adjusted Currency Neutral Operating Profit  
(in millions, except Per Piece amounts):  
                         
Three Months Ended June 30  
                         
                  2018      
  2018 As-   2017 As-           Currency      
  Reported   Reported   % Change   Currency   Neutral   % Change  
   (GAAP)    (GAAP)   (GAAP)   Impact   (non-GAAP)   (non-GAAP)  
Average Revenue Per Piece:                        
International Package:                        
Domestic $ 6.61   $ 6.01   10.0%     $ (0.41)     $ 6.20   3.2%    
Export   30.14     29.16   3.4%       (0.73)       29.41   0.9%    
Total International Package $ 17.50   $ 16.31   7.3%     $ (0.57)     $ 16.93   3.8%    
                         
                         
Consolidated $ 11.26   $ 10.76   4.6%     $ (0.09)     $ 11.17   3.8%    
                         
Revenue:                        
U.S. Domestic Package $ 10,354   $ 9,741   6.3%     $ -     $ 10,354   6.3%    
International Package   3,602     3,171   13.6%       (113)       3,489   10.0%    
Supply Chain & Freight   3,500     3,015   16.1%       (29)       3,471   15.1%    
Total revenue $ 17,456   $ 15,927   9.6%     $ (142)     $ 17,314   8.7%    
                         
                  2018 As-      
                  Adjusted      
  2018 As-   2017 As-           Currency      
  Adjusted   Adjusted   % Change   Currency   Neutral   % Change  
   (non-GAAP)    (non-GAAP)   (non-GAAP)   Impact   (non-GAAP)   (non-GAAP)  
As-Adjusted Operating Profit:                        
U.S. Domestic Package $ 1,135   $ 1,255   -9.6%     $ -     $ 1,135   -9.6%    
International Package   654     570   14.7%       (22)       632   10.9%    
Supply Chain & Freight   247     212   16.5%       2       249   17.5%    
Total operating profit $ 2,036   $ 2,037   0.0%     $ (20)     $ 2,016   -1.0%    
                         

 

                         
Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and As-Adjusted Currency Neutral Operating Profit  
(in millions, except Per Piece amounts):  
                         
Six Months Ended June 30  
                         
                  2018      
  2018 As-   2017 As-           Currency      
  Reported   Reported   % Change   Currency   Neutral   % Change  
   (GAAP)    (GAAP)   (GAAP)   Impact   (non-GAAP)   (non-GAAP)  
Average Revenue Per Piece:                        
International Package:                        
Domestic $ 6.66   $ 5.85   13.8%     $ (0.58)     $ 6.08   3.9%    
Export   29.50     28.65   3.0%       (0.97)       28.53   -0.4%    
Total International Package $ 17.24   $ 15.88   8.6%     $ (0.76)     $ 16.48   3.8%    
                         
                         
Consolidated $ 11.11   $ 10.64   4.4%     $ (0.12)     $ 10.99   3.3%    
                         
Revenue:                        
U.S. Domestic Package $ 20,581   $ 19,277   6.8%     $ -     $ 20,581   6.8%    
International Package   7,135     6,245   14.3%       (306)       6,829   9.4%    
Supply Chain & Freight   6,853     5,915   15.9%       (80)       6,773   14.5%    
Total revenue $ 34,569   $ 31,437   10.0%     $ (386)     $ 34,183   8.7%    
                         
                  2018 As-      
                  Adjusted      
  2018 As-   2017 As-           Currency      
  Adjusted   Adjusted   % Change   Currency   Neutral   % Change  
   (non-GAAP)    (non-GAAP)   (non-GAAP)   Impact   (non-GAAP)   (non-GAAP)  
As-Adjusted Operating Profit:                        
U.S. Domestic Package $ 1,891   $ 2,205   -14.2%     $ -     $ 1,891   -14.2%    
International Package   1,248     1,088   14.7%       (44)       1,204   10.7%    
Supply Chain & Freight   417     361   15.5%       1       418   15.8%    
Total operating profit $ 3,556   $ 3,654   -2.7%     $ (43)     $ 3,513   -3.9%    
                         

 

         
Reconciliation of GAAP and non-GAAP Liquidity Measures      
 (in millions):     
         
Six Months Ended June 30
         
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash  
         
    Preliminary  
    2018    
Cash flows from operating activities   $ 7,200    
Cash flows used in investing activities     (2,820)    
Cash flows used in financing activities     (3,607)    
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     (51)    
Net increase in cash, cash equivalents, and restricted cash   $ 722    
         
         
Reconciliation of Free Cash Flow (non-GAAP)  
         
    Preliminary  
    2018    
Cash flows from operating activities (GAAP)   $ 7,200    
Capital expenditures     (2,849)    
Proceeds from disposals of PP&E     35    
Net change in finance receivables     (4)    
Other investing activities     (7)    
Free cash flow (non-GAAP)   $ 4,375    
         

 

 
United Parcel Service, Inc.
Selected Financial Data - Second Quarter
(unaudited)
                 
  Three Months Ended      
  June 30    
    2018       2017     Change   % Change  
(amounts in millions, except per share data)                
Statement of Income Data:                
Revenue:                
U.S. Domestic Package $ 10,354     $ 9,741     $ 613     6.3%    
International Package   3,602       3,171       431     13.6%    
Supply Chain & Freight   3,500       3,015       485     16.1%    
Total revenue   17,456       15,927       1,529     9.6%    
                 
Operating expenses:                
Compensation and benefits   9,024       8,284       740     8.9%    
Other   6,659       5,606       1,053     18.8%    
Total operating expenses   15,683       13,890       1,793     12.9%    
                 
Operating profit:                
U.S. Domestic Package   939       1,255       (316)     -25.2%    
International Package   618       570       48     8.4%    
Supply Chain & Freight   216       212       4     1.9%    
Total operating profit   1,773       2,037       (264)     -13.0%    
                 
Other income (expense):                
Other pension income (expense)   284       179       105     58.7%    
Investment income and other   18       14       4     28.6%    
Interest expense   (149)       (111)       (38)     34.2%    
Total other income (expense)   153       82       71     86.6%    
                 
Income before income taxes   1,926       2,119       (193)     -9.1%    
                 
Income tax expense   441       735       (294)     -40.0%    
                 
Net income $ 1,485     $ 1,384     $ 101     7.3%    
                 
Net income as a percentage of revenue   8.5%       8.7%            
                 
Per share amounts:                
Basic earnings per share $ 1.71     $ 1.59     $ 0.12     7.5%    
Diluted earnings per share $ 1.71     $ 1.58     $ 0.13     8.2%    
                 
Weighted-average shares outstanding:                
Basic   866       872       (6)     -0.7%    
Diluted   870       876       (6)     -0.7%    
                 
As adjusted income data:                
Operating profit:                
U.S. Domestic Package (1) $ 1,135     $ 1,255     $ (120)     -9.6%    
International Package (1)   654       570       84     14.7%    
Supply Chain & Freight (1)   247       212       35     16.5%    
Total operating profit (1)   2,036       2,037       (1)     0.0%    
                 
Income before income taxes (1) $ 2,189     $ 2,119     $ 70     3.3%    
Net income (2) $ 1,685     $ 1,384     $ 301     21.7%    
                 
Basic earnings per share (2) $ 1.95     $ 1.59     $ 0.36     22.6%    
Diluted earnings per share (2) $ 1.94     $ 1.58     $ 0.36     22.8%    
                 
(1) 2018 operating profit and consolidated income before income taxes exclude the impact of $263 million of transformation strategy costs, which includes voluntary retirement plan severance costs of $192 million, and other costs of $71 million.  These costs are allocated between the U.S. Domestic Package segment ($196 million), International Package segment ($36 million) and Supply Chain & Freight segment ($31 million).  
   
(2) 2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $200 million.  
   

 

 
United Parcel Service, Inc.
Selected Operating Data - Second Quarter
(unaudited)
               
  Three Months Ended        
  June 30  
    2018     2017   Change   % Change
               
Revenue (in millions):              
U.S. Domestic Package:              
Next Day Air $ 1,830   $ 1,752   $ 78     4.5%  
Deferred   1,080     1,020     60     5.9%  
Ground   7,444     6,969     475     6.8%  
Total U.S. Domestic Package   10,354     9,741     613     6.3%  
International Package:              
Domestic   700     623     77     12.4%  
Export   2,747     2,426     321     13.2%  
Cargo and Other   155     122     33     27.0%  
Total International Package   3,602     3,171     431     13.6%  
Supply Chain & Freight:              
Forwarding   1,659     1,347     312     23.2%  
Logistics   784     718     66     9.2%  
Freight   853     755     98     13.0%  
Other   204     195     9     4.6%  
Total Supply Chain & Freight   3,500     3,015     485     16.1%  
Consolidated $ 17,456   $ 15,927   $ 1,529     9.6%  
               
Consolidated volume (in millions)   1,226     1,189     37     3.1%  
               
Operating weekdays   64     64     -     0.0%  
               
Average Daily Package Volume (in thousands):            
U.S. Domestic Package:              
Next Day Air   1,424     1,396     28     2.0%  
Deferred   1,226     1,253     (27 )   -2.2%  
Ground   13,420     13,012     408     3.1%  
Total U.S. Domestic Package   16,070     15,661     409     2.6%  
International Package:              
Domestic   1,654     1,621     33     2.0%  
Export   1,424     1,300     124     9.5%  
Total International Package   3,078     2,921     157     5.4%  
Consolidated   19,148     18,582     566     3.0%  
               
Average Revenue Per Piece:              
U.S. Domestic Package:              
Next Day Air $ 20.08   $ 19.61   $ 0.47     2.4%  
Deferred   13.76     12.72     1.04     8.2%  
Ground   8.67     8.37     0.30     3.6%  
Total U.S. Domestic Package   10.07     9.72     0.35     3.6%  
International Package:              
Domestic   6.61     6.01     0.60     10.0%  
Export   30.14     29.16     0.98     3.4%  
Total International Package   17.50     16.31     1.19     7.3%  
Consolidated $ 11.26   $ 10.76   $ 0.50     4.6%  
               

 

 
 
United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
                         
Currency Neutral Revenue Per Piece  
(unaudited)  
                         
  Three Months Ended           Currency Neutral      
  June 30                
    2018     2017   % Change   Currency   2018*   % Change  
                         
Average Revenue Per Piece:                        
International Package:                        
Domestic $ 6.61   $ 6.01     10.0%     $ (0.41)     $ 6.20   3.2%    
Export   30.14     29.16     3.4%       (0.73)       29.41   0.9%    
Total International Package $ 17.50   $ 16.31     7.3%     $ (0.57)     $ 16.93   3.8%    
                         
                         
Consolidated $ 11.26   $ 10.76     4.6%     $ (0.09)     $ 11.17   3.8%    
                         
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences          
                         
Currency Neutral Revenue  
(unaudited)  
                         
  Three Months Ended           Currency Neutral      
  June 30                
    2018     2017   % Change   Currency   2018*   % Change  
Revenue (in millions):                        
U.S. Domestic Package $ 10,354   $ 9,741     6.3%     $ -     $ 10,354   6.3%    
International Package   3,602     3,171     13.6%       (113)       3,489   10.0%    
Supply Chain & Freight   3,500     3,015     16.1%       (29)       3,471   15.1%    
Total revenue $ 17,456   $ 15,927     9.6%     $ (142)     $ 17,314   8.7%    
                         
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences          
                         
Currency Neutral Operating Profit  
(unaudited)  
                         
  Three Months Ended           Currency Neutral      
  June 30                
  2018*     2017   % Change   Currency   2018**   % Change  
As-Adjusted Operating profit (in millions):                      
U.S. Domestic Package $ 1,135   $ 1,255     -9.6%     $ -     $ 1,135   -9.6%    
International Package   654     570     14.7%       (22)       632   10.9%    
Supply Chain & Freight   247     212     16.5%       2       249   17.5%    
Total operating profit $ 2,036   $ 2,037     0.0%     $ (20)     $ 2,016   -1.0%    
                         
* Amounts adjusted for Transformation strategy costs                        
** Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences  
                         
UPS Freight Selected Operating Data - Second Quarter   
(unaudited)  
                         
  Three Months Ended                  
  June 30              
    2018     2017   Change   % Change          
LTL revenue (in millions) $ 726   $ 654   $ 72       11.0%            
LTL revenue per LTL hundredweight $ 25.36   $ 23.62   $ 1.74       7.4%            
                         
LTL shipments (in thousands)   2,639     2,639     -       0.0%            
LTL shipments per day (in thousands)   41.2     41.2     -       0.0%            
                         
LTL gross weight hauled (in millions of pounds)   2,861     2,767     94       3.4%            
LTL weight per shipment (in pounds)   1,084     1,049     35       3.3%            
                         
Operating weekdays   64     64     -       0.0%            
                         

 

 
United Parcel Service, Inc.
Detail of Other Operating Expenses - Second Quarter
(unaudited)
                 
                 
(in millions) Three Months Ended        
  June 30      
    2018     2017   Change   % Change  
Repairs and maintenance $ 423   $ 392   $ 31     7.9%    
Depreciation and amortization   542     562     (20)     -3.6%    
Purchased transportation   3,209     2,614     595     22.8%    
Fuel   852     616     236     38.3%    
Other occupancy   321     264     57     21.6%    
Other expenses   1,312     1,158     154     13.3%    
Total other operating expenses $ 6,659   $ 5,606   $ 1,053     18.8%    
                 
                 
                 
Detail of Other Pension Income (Expense) - Second Quarter
(unaudited)
                 
                 
(in millions) Three Months Ended        
  June 30      
    2018     2017   Change   % Change  
U.S. Domestic Package $ 227   $ 137   $ 90     65.7%    
International Package   20     14     6     42.9%    
Supply Chain & Freight   37     28     9     32.1%    
Total other pension income (expense) $ 284   $ 179   $ 105     58.7%    
                 
                 
                 
Earnings Per Share and Share Data - Second Quarter 
(unaudited)
                 
                 
      Three Months Ended      
(amounts in millions, except per share data)     June 30      
        2018     2017        
                 
Numerator:                
Net income     $ 1,485   $ 1,384        
                 
Denominator:                
Weighted-average shares       861     867        
Deferred compensation obligations       1     1        
Vested portion of restricted units       4     4        
Denominator for basic earnings per share       866     872        
                 
Effect of dilutive securities:                
Restricted units       3     3        
Stock options       1     1        
Denominator for diluted earnings per share       870     876        
                 
Basic earnings per share     $ 1.71   $ 1.59        
                 
Diluted earnings per share     $ 1.71   $ 1.58        
                 
                 
                 
Detail of shares outstanding as of June 30, 2018:              
                 
Class A shares       167          
Class B shares       693          
Total shares outstanding       860          
                 

 

United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
                 
  Six Months Ended      
  June 30    
    2018       2017     Change   % Change  
(amounts in millions, except per share data)                
Statement of Income Data:                
Revenue:                
U.S. Domestic Package $ 20,581     $ 19,277     $ 1,304     6.8%    
International Package   7,135       6,245       890     14.3%    
Supply Chain & Freight   6,853       5,915       938     15.9%    
Total revenue   34,569       31,437       3,132     10.0%    
                 
Operating expenses:                
Compensation and benefits   18,069       16,595       1,474     8.9%    
Other   13,207       11,188       2,019     18.0%    
Total operating expenses   31,276       27,783       3,493     12.6%    
                 
Operating profit:                
U.S. Domestic Package   1,695       2,205       (510)     -23.1%    
International Package   1,212       1,088       124     11.4%    
Supply Chain & Freight   386       361       25     6.9%    
Total operating profit   3,293       3,654       (361)     -9.9%    
                 
Other income (expense):                
Other pension income (expense)   569       359       210     58.5%    
Investment income and other   27       29       (2)     -6.9%    
Interest expense   (302)       (213)       (89)     41.8%    
Total other income (expense)   294       175       119     68.0%    
                 
Income before income taxes   3,587       3,829       (242)     -6.3%    
                 
Income tax expense   757       1,279       (522)     -40.8%    
                 
Net income $ 2,830     $ 2,550     $ 280     11.0%    
                 
Net income as a percentage of revenue   8.2%       8.1%            
                 
Per share amounts:                
Basic earnings per share $ 3.27     $ 2.92     $ 0.35     12.0%    
Diluted earnings per share $ 3.25     $ 2.91     $ 0.34     11.7%    
                 
Weighted-average shares outstanding:                
Basic   866       873       (7)     -0.8%    
Diluted   870       877       (7)     -0.8%    
                 
As adjusted income data:                
Operating profit:                
U.S. Domestic Package (1) $ 1,891     $ 2,205     $ (314)     -14.2%    
International Package (1)   1,248       1,088       160     14.7%    
Supply Chain & Freight   417       361       56     15.5%    
Total operating profit (1)   3,556       3,654       (98)     -2.7%    
                 
Income before income taxes (1) $ 3,850     $ 3,829     $ 21     0.5%    
Net income (2) $ 3,030     $ 2,550     $ 480     18.8%    
                 
Basic earnings per share (2) $ 3.50     $ 2.92     $ 0.58     19.9%    
Diluted earnings per share (2) $ 3.48     $ 2.91     $ 0.57     19.6%    
                 
(1) 2018 operating profit and consolidated income before income taxes exclude the impact of $263 million of transformation strategy costs, which includes voluntary retirement plan severance costs of $192 million, and other costs of $71 million.  These costs are allocated between the U.S. Domestic Package segment ($196 million), International Package segment ($36 million) and Supply Chain & Freight segment ($31 million).  
                 
(2) 2018 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $200 million.  
                 

 

United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
                 
  Six Months Ended          
  June 30    
    2018     2017   Change   % Change  
                 
Revenue (in millions):                
U.S. Domestic Package:                
Next Day Air $ 3,614   $ 3,417   $ 197   5.8%    
Deferred   2,149   $ 1,990     159   8.0%    
Ground   14,818     13,870     948   6.8%    
Total U.S. Domestic Package   20,581     19,277     1,304   6.8%    
International Package:                
Domestic   1,416   $ 1,236     180   14.6%    
Export   5,419   $ 4,763     656   13.8%    
Cargo and Other   300     246     54   22.0%    
Total International Package   7,135     6,245     890   14.3%    
Supply Chain & Freight:                
Forwarding   3,264     2,613     651   24.9%    
Logistics   1,566     1,458     108   7.4%    
Freight   1,630     1,462     168   11.5%    
Other   393     382     11   2.9%    
Total Supply Chain & Freight   6,853     5,915     938   15.9%    
Consolidated $ 34,569   $ 31,437   $ 3,132   10.0%    
                 
Consolidated volume (in millions)   2,467     2,376     91   3.8%    
                 
Operating weekdays   128     128     -   0.0%    
                 
Average Daily Package Volume (in thousands):              
U.S. Domestic Package:                
Next Day Air   1,430     1,355     75   5.5%    
Deferred   1,261     1,248     13   1.0%    
Ground   13,483     13,011     472   3.6%    
Total U.S. Domestic Package   16,174     15,614     560   3.6%    
International Package:                
Domestic   1,662     1,652     10   0.6%    
Export   1,435     1,299     136   10.5%    
Total International Package   3,097     2,951     146   5.0%    
Consolidated   19,271     18,565     706   3.8%    
                 
Average Revenue Per Piece:                
U.S. Domestic Package:                
Next Day Air $ 19.74   $ 19.70   $ 0.04   0.2%    
Deferred   13.31     12.46     0.85   6.8%    
Ground   8.59     8.33     0.26   3.1%    
Total U.S. Domestic Package   9.94     9.65     0.29   3.0%    
International Package:                
Domestic   6.66     5.85     0.81   13.8%    
Export   29.50     28.65     0.85   3.0%    
Total International Package   17.24     15.88     1.36   8.6%    
Consolidated $ 11.11   $ 10.64   $ 0.47   4.4%    
                 

 

 
United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
                           
Currency Neutral Revenue Per Piece    
(unaudited)    
                           
  Six Months Ended           Currency Neutral        
  June 30                  
    2018     2017   % Change   Currency   2018*   % Change    
                           
Average Revenue Per Piece:                          
International Package:                          
Domestic $ 6.66   $ 5.85     13.8%     $ (0.58)     $ 6.08   3.9%      
Export   29.50     28.65     3.0%       (0.97)       28.53   -0.4%      
Total International Package $ 17.24   $ 15.88     8.6%     $ (0.76)     $ 16.48   3.8%      
                           
                           
Consolidated $ 11.11   $ 10.64     4.4%     $ (0.12)     $ 10.99   3.3%      
                           
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences            
                           
Currency Neutral Revenue    
(unaudited)    
                           
  Six Months Ended           Currency Neutral        
  June 30                  
    2018     2017   % Change   Currency   2018*   % Change    
Revenue (in millions):                          
U.S. Domestic Package $ 20,581   $ 19,277     6.8%     $ -     $ 20,581   6.8%      
International Package   7,135     6,245     14.3%       (306)       6,829   9.4%      
Supply Chain & Freight   6,853     5,915     15.9%       (80)       6,773   14.5%      
Total revenue $ 34,569   $ 31,437     10.0%     $ (386)     $ 34,183   8.7%      
                           
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences            
                           
Currency Neutral Operating Profit    
(unaudited)    
                           
  Six Months Ended           Currency Neutral        
  June 30                  
  2018*     2017   % Change   Currency   2018**   % Change    
As-Adjusted Operating profit (in millions):                        
U.S. Domestic Package $ 1,891   $ 2,205     -14.2%     $ -     $ 1,891   -14.2%      
International Package   1,248     1,088     14.7%       (44)       1,204   10.7%      
Supply Chain & Freight   417     361     15.5%       1       418   15.8%      
Total operating profit $ 3,556   $ 3,654     -2.7%     $ (43)     $ 3,513   -3.9%      
                           
* Amounts adjusted for Transformation strategy costs                          
** Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences    
                           
UPS Freight Selected Operating Data - Year to Date    
(unaudited)    
                           
  Six Months Ended                    
  June 30                
    2018     2017   Change   % Change            
LTL revenue (in millions) $ 1,387   $ 1,270   $ 117       9.2%              
LTL revenue per LTL hundredweight $ 25.08   $ 23.61   $ 1.47       6.2%              
                           
LTL shipments (in thousands)   5,107     5,149     (42)       -0.8%              
LTL shipments per day (in thousands)   39.9     40.2     (0.3)       -0.8%              
                           
LTL gross weight hauled (in millions of pounds)   5,531     5,380     151       2.8%              
LTL weight per shipment (in pounds)   1,083     1,045     38       3.6%              
                           
Operating weekdays   128     128     -       0.0%              
                           

 

 
United Parcel Service, Inc.
Detail of Other Operating Expenses - Year to Date
(unaudited)
                 
                 
(in millions) Six Months Ended          
  June 30      
    2018     2017   Change   % Change  
Repairs and Maintenance $ 857   $ 782   $ 75   9.6%    
Depreciation and Amortization   1,138     1,116     22   2.0%    
Purchased Transportation   6,354     5,159     1,195   23.2%    
Fuel   1,602     1,237     365   29.5%    
Other Occupancy   682     563     119   21.1%    
Other Expenses   2,574     2,331     243   10.4%    
Total Other Operating Expenses $ 13,207   $ 11,188   $ 2,019   18.0%    
                 
                 
                 
Detail of Other Pension Income (Expense) - Year to Date
(unaudited)
                 
                 
(in millions) Six Months Ended        
  June 30      
    2018     2017   Change   % Change  
U.S. Domestic Package $ 454   $ 276   $ 178   64.5%    
International Package   40     27     13   48.1%    
Supply Chain & Freight   75     56     19   33.9%    
Total other pension income (expense) $ 569   $ 359   $ 210   58.5%    
                 
                 
                 
Earnings Per Share and Share Data - Year to Date
(unaudited)
                 
                 
      Six Months Ended      
(amounts in millions, except per share data)     June 30      
        2018     2017      
                 
Numerator:                
Net income     $ 2,830   $ 2,550      
                 
Denominator:                
Weighted-average shares       861     868      
Deferred compensation obligations       1     1      
Vested portion of restricted units       4     4      
Denominator for basic earnings per share       866     873      
                 
Effect of dilutive securities:                
Restricted units       3     3      
Stock options       1     1      
Denominator for diluted earnings per share       870     877      
                 
Basic earnings per share     $ 3.27   $ 2.92      
                 
Diluted earnings per share     $ 3.25   $ 2.91      
                 

 

United Parcel Service, Inc.
Consolidated Balance Sheets - June 30, 2018 and December 31, 2017
(unaudited)
         
  (amounts in millions)   June 30,   December 31,  
  2018   2017  
  ASSETS          
  Current Assets:          
  Cash and marketable securities   $ 4,934   $ 4,069  
  Other current assets     8,940     11,649  
  Total Current Assets     13,874     15,718  
  Property, Plant and Equipment     51,200     48,726  
  Less accumulated depreciation and amortization     27,299     26,608  
    23,901     22,118  
  Other Assets     7,448     7,738  
  $ 45,223   $ 45,574  
         
  LIABILITIES AND SHAREOWNERS' EQUITY          
  Current Liabilities   $ 12,487   $ 12,886  
  Long-Term Debt     19,121     20,278  
  Pension and Postretirement Benefit Obligations     7,026     7,061  
  Deferred Taxes, Credits and Other Liabilities     4,233     4,325  
  Shareowners' Equity     2,356     1,024  
  $ 45,223   $ 45,574  
         
  Amounts are subject to reclassification.          
             

 

 
United Parcel Service, Inc.
Selected Cash Flow Data
(unaudited)
       
Net Increase (Decrease) in Cash and Cash Equivalents
     
  Preliminary  
  Year-to-Date  
(amounts in millions)   June 30  
Cash flows from operating activities   $ 7,200    
Cash flows used in investing activities     (2,820)    
Cash flows used in financing activities     (3,607)    
Effect of exchange rate changes on cash and cash equivalents     (51)    
Net increase in cash and cash equivalents   $ 722    
       
       
       
       
Reconciliation of Free Cash Flow (non-GAAP measure)
       
  Preliminary  
  Year-to-Date  
(amounts in millions)   June 30  
Cash flows from operating activities   $ 7,200    
Capital expenditures     (2,849)    
Proceeds from disposals of PP&E     35    
Net change in finance receivables     (4)    
Other investing activities     (7)    
Free cash flow (non-GAAP measure) $ 4,375    
     
     
     
       
Amounts are subject to reclassification.      

 

   
United Parcel Service, Inc.  
Aircraft Fleet - As of June 30, 2018  
(unaudited)  
           
  Owned and Leases & Charters      
Description Capital Leases from Others On Order Under Option  
Operating:          
Boeing 757-200 75 - - -  
Boeing 767-200 - 2 -    
Boeing 767-300 59 - 9 -  
Boeing 767-300BCF 3 - - -  
Airbus A300-600 52 - - -  
Boeing MD-11 37 5 - -  
Boeing 747-400F 11 - - -  
Boeing 747-400BCF 2 - - -  
Boeing 747-8F 6 - 22 -  
Other - 315 - -  
           
Total 245 322 31 -  
           

 

Contacts:            Steve Gaut, Public Relations   
            404-828-8787
             
            Scott Childress, Investor Relations
            404-828-7957 

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