(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
UNITED PARCEL SERVICE, INC. | |||||||
Date: | October 22, 2019 | By: | /s/ RICHARD N. PERETZ | ||||
Richard N. Peretz | |||||||
Senior Vice President | |||||||
Contacts: | Steve Gaut, Public Relations |
404-828-8787 | |
Scott Childress, Investor Relations | |
404-828-7957 |
• | 3Q19 EPS of $2.01, Up More Than 16%; Adjusted* EPS Up 13.7% to $2.07 |
• | U.S. Daily Volume Grew Above 9%; Next Day Air Volume Jumped Nearly 24% |
• | U.S. Operating Profit Rose Over 28%; Grew Nearly 26% on an Adjusted Basis |
• | Positive Operating Leverage in U.S. Driven by Lower Unit Cost |
• | International Operating Profit Up 24.4%; and 20.3% on an Adjusted Basis |
• | Supply Chain and Freight Operating Margin of 7.3%; Adjusted Margin of 7.6% |
• | Reaffirms 2019 Adjusted EPS and Raises Adjusted FCF Target to Over $4.0B |
Consolidated Results | 3Q 2019 | Adjusted 3Q 2019 | 3Q 2018 | Adjusted 3Q 2018 |
Revenue | $18,318 M | $17,444 M | ||
Net Income | $1,750 M | $1,797 M | $1,508 M | $1,581 M |
Diluted Earnings Per Share | $2.01 | $2.07 | $1.73 | $1.82 |
• | Consolidated revenue increased 5% to $18.3 billion, driven by strong average daily volume growth in the U.S. |
• | Total operating profit growth was very strong at more than 23%, and 20.1% on an adjusted basis, led by the U.S. Domestic and International segments. |
• | Total operating margin expanded 170 basis points**; adjusted operating margin expanded 150 basis points. |
• | Adjusted capital expenditures for the year are approximately $4.5 billion to support network enhancements. |
• | Year-to-date cash from operations was $5.7 billion and adjusted free cash flow grew to $3.2 billion. |
• | Dividends per share increased 5.5%, and the company repurchased 7 million shares for approximately $753 million year-to-date. |
3Q 2019 | Adjusted 3Q 2019 | 3Q 2018 | Adjusted 3Q 2018 | |
Revenue | $11,455 M | $10,437 M | ||
Operating profit | $1,216 M | $1,242 M | $949 M | $988 M |
• | Revenue grew more than $1 billion, a nearly 10% increase. |
• | Operating profit increased 28.1%, and nearly 26% on an adjusted basis. |
• | Operating margin was 10.6%; adjusted operating margin expanded 130 basis points. |
• | Unit costs were lower by 2.7%; on an adjusted basis, down 2.5%, contributing to positive operating leverage. |
3Q 2019 | Adjusted 3Q 2019 | 3Q 2018 | Adjusted 3Q 2018 | |
Revenue | $3,494 M | $3,478 M | ||
Operating profit | $667 M | $693 M | $536 M | $576 M |
• | International saw export volume growth on intra-European trade lanes and virtually all Asia trade lanes except Asia-U.S. |
• | International domestic revenue per piece fell less than 1%, but grew 2.3% when adjusting for currency. |
• | Operating profit increased more than 24%, or by 20.3% on an adjusted basis. |
• | Industry-leading operating margin remained strong at 19.1%; adjusted operating margin expanded 320 basis points**. |
3Q 2019 | Adjusted 3Q 2019 | 3Q 2018 | Adjusted 3Q 2018 | |
Revenue | $3,369 M | $3,529 M | ||
Operating profit | $245 M | $256 M | $242 M | $260 M |
• | Operating margin expanded to 7.3%, and to 7.6% on an adjusted basis. |
• | Logistics revenue increased more than 7% from growth in the healthcare, retail and manufacturing sectors. |
• | UPS Freight produced an increase in revenue per LTL (less-than-truckload) hundredweight of nearly 4%, driven by its focus on small and medium-sized businesses. |
• | The Forwarding unit adjusted costs and partially offset the negative revenue impact of trade uncertainty. |
• | The company reaffirms full-year adjusted diluted EPS in the range of $7.45 to $7.75. |
• | Guidance assumes no further deterioration regarding global trade uncertainty or U.S. industrial weakness. |
• | Adjusted free cash flow for the year is projected to be over $4.0 billion. |
• | Capital investments have been reduced in both 2019 and 2020 by about $500 million each year. Network automation targets and other transformation goals remain unchanged. |
• | The effective tax rate for the full year 2019 is estimated to be between 22% and 23%. |
• | Transformation charges are not included in the adjusted guidance. |
Three Months Ended September 30, 2019 | |||||||||||
As- Reported (GAAP) | Transformation Strategy Costs(1) | As-Adjusted (Non-GAAP) | |||||||||
Operating profit: | |||||||||||
U.S. Domestic Package | $ | 1,216 | $ | 26 | $ | 1,242 | |||||
International Package | 667 | 26 | 693 | ||||||||
Supply Chain & Freight | 245 | 11 | 256 | ||||||||
Total operating profit | $ | 2,128 | $ | 63 | $ | 2,191 | |||||
Income before income taxes | $ | 2,206 | $ | 63 | $ | 2,269 | |||||
Income tax expense | $ | 456 | $ | 16 | $ | 472 | |||||
Net income | $ | 1,750 | $ | 47 | $ | 1,797 | |||||
Diluted earnings per share | $ | 2.01 | $ | 0.06 | $ | 2.07 |
Nine Months Ended September 30, 2019 | |||||||||||
As- Reported (GAAP) | Transformation Strategy Costs (1) | As-Adjusted (Non-GAAP) | |||||||||
Operating profit: | |||||||||||
U.S. Domestic Package | $ | 3,090 | $ | 72 | $ | 3,162 | |||||
International Package | 1,858 | 112 | 1,970 | ||||||||
Supply Chain & Freight | 717 | 23 | 740 | ||||||||
Total operating profit | $ | 5,665 | $ | 207 | $ | 5,872 | |||||
Income before income taxes | $ | 5,850 | $ | 207 | $ | 6,057 | |||||
Income tax expense | $ | 1,304 | $ | 50 | $ | 1,354 | |||||
Net income | $ | 4,546 | $ | 157 | $ | 4,703 | |||||
Diluted earnings per share | $ | 5.23 | $ | 0.18 | $ | 5.41 |
Three Months Ended September 30 | |||||||||||||||||||
2019 As- Reported (GAAP) | 2018 As- Reported (GAAP) | % Change (GAAP) | Currency Impact | 2019 Currency- Neutral (Non-GAAP) (1) | % Change (Non-GAAP) | ||||||||||||||
Average Revenue Per Piece: | |||||||||||||||||||
International Package: | |||||||||||||||||||
Domestic | $ | 6.45 | $ | 6.47 | (0.3 | )% | $ | 0.17 | $ | 6.62 | 2.3 | % | |||||||
Export | 29.06 | 29.32 | (0.9 | )% | 0.06 | 29.12 | (0.7 | )% | |||||||||||
Total International Package | $ | 16.92 | $ | 17.06 | (0.8 | )% | $ | 0.11 | $ | 17.03 | (0.2 | )% | |||||||
Consolidated | $ | 11.02 | $ | 11.20 | (1.6 | )% | $ | 0.01 | $ | 11.03 | (1.5 | )% | |||||||
Revenue: | |||||||||||||||||||
U.S. Domestic Package | $ | 11,455 | $ | 10,437 | 9.8 | % | $ | — | $ | 11,455 | 9.8 | % | |||||||
International Package | 3,494 | 3,478 | 0.5 | % | 24 | 3,518 | 1.2 | % | |||||||||||
Supply Chain & Freight | 3,369 | 3,529 | (4.5 | )% | 20 | 3,389 | (4.0 | )% | |||||||||||
Total revenue | $ | 18,318 | $ | 17,444 | 5.0 | % | $ | 44 | $ | 18,362 | 5.3 | % | |||||||
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences | |||||||||||||||||||
2019 As- Adjusted (Non-GAAP) (1) | 2018 As-Adjusted (Non-GAAP)(1) | % Change (Non-GAAP) | Currency Impact | 2019 As -Adjusted Currency Neutral (Non-GAAP) (2) | % Change (Non-GAAP) | ||||||||||||||
Operating Profit: | |||||||||||||||||||
U.S. Domestic Package | $ | 1,242 | $ | 988 | 25.7 | % | $ | — | $ | 1,242 | 25.7 | % | |||||||
International Package | 693 | 576 | 20.3 | % | (32 | ) | 661 | 14.8 | % | ||||||||||
Supply Chain & Freight | 256 | 260 | (1.5 | )% | 7 | 263 | 1.2 | % | |||||||||||
Total operating profit | $ | 2,191 | $ | 1,824 | 20.1 | % | $ | (25 | ) | $ | 2,166 | 18.8 | % | ||||||
(1) Amounts adjusted for Transformation strategy costs | |||||||||||||||||||
(2) Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences |
Nine Months Ended September 30 | |||||||||||||||||||
2019 As- Reported (GAAP) | 2018 As- Reported (GAAP) | % Change (GAAP) | Currency Impact | 2019 Currency- Neutral (Non-GAAP) (1) | % Change (Non-GAAP) | ||||||||||||||
Average Revenue Per Piece: | |||||||||||||||||||
International Package: | |||||||||||||||||||
Domestic | $ | 6.52 | $ | 6.60 | (1.2 | )% | $ | 0.33 | $ | 6.85 | 3.8 | % | |||||||
Export | 29.29 | 29.43 | (0.5 | )% | 0.43 | 29.72 | 1.0 | % | |||||||||||
Total International Package | $ | 17.04 | $ | 17.18 | (0.8 | )% | $ | 0.37 | $ | 17.41 | 1.3 | % | |||||||
Consolidated | $ | 11.10 | $ | 11.14 | (0.4 | )% | $ | 0.06 | $ | 11.16 | 0.2 | % | |||||||
Revenue: | |||||||||||||||||||
U.S. Domestic Package | $ | 33,085 | $ | 31,018 | 6.7 | % | $ | — | $ | 33,085 | 6.7 | % | |||||||
International Package | 10,458 | 10,613 | (1.5 | )% | 222 | 10,680 | 0.6 | % | |||||||||||
Supply Chain & Freight | 9,983 | 10,382 | (3.8 | )% | 70 | 10,053 | (3.2 | )% | |||||||||||
Total revenue | $ | 53,526 | $ | 52,013 | 2.9 | % | $ | 292 | $ | 53,818 | 3.5 | % | |||||||
(1) Amounts adjusted for period over period foreign currency exchange rate and hedging differences | |||||||||||||||||||
2019 As- Adjusted (Non-GAAP) (1) | 2018 As-Adjusted (Non-GAAP)(1) | % Change (Non-GAAP) | Currency Impact | 2019 As-Adjusted Currency Neutral (Non-GAAP) (2) | % Change (Non-GAAP) | ||||||||||||||
Operating Profit: | |||||||||||||||||||
U.S. Domestic Package | $ | 3,162 | $ | 2,879 | 9.8 | % | $ | — | $ | 3,162 | 9.8 | % | |||||||
International Package | 1,970 | 1,824 | 8.0 | % | (46 | ) | 1,924 | 5.5 | % | ||||||||||
Supply Chain & Freight | 740 | 677 | 9.3 | % | 9 | 749 | 10.6 | % | |||||||||||
Total operating profit | $ | 5,872 | $ | 5,380 | 9.1 | % | $ | (37 | ) | $ | 5,835 | 8.5 | % | ||||||
(1) Amounts adjusted for Transformation strategy costs | |||||||||||||||||||
(2) Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences |
Nine Months Ended September 30 | ||||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | ||||
Preliminary 2019 | ||||
Cash flows from operating activities | $ | 5,693 | ||
Cash flows used in investing activities | (4,027 | ) | ||
Cash flows used in financing activities | (1,824 | ) | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 6 | |||
Net increase/(decrease) in cash, cash equivalents and restricted cash | $ | (182 | ) | |
Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures) | ||||
Preliminary 2019 | ||||
Cash flows from operating activities (GAAP) | $ | 5,693 | ||
Capital expenditures | (4,336 | ) | ||
Principal repayments of capital lease obligations | (120 | ) | ||
Adjusted capital expenditures (non-GAAP measure) | $ | (4,456 | ) | |
Proceeds from disposals of PP&E | 61 | |||
Net change in finance receivables | 8 | |||
Other investing activities | (84 | ) | ||
Adjusted free cash flow (Non-GAAP measure) | $ | 1,222 | ||
Discretionary pension contributions | 2,000 | |||
Adjusted free cash flow (non-GAAP measure) excluding discretionary pension contributions | $ | 3,222 | ||
Three Months Ended | |||||||||||
September 30 | |||||||||||
2019 | 2018 | Change | % Change | ||||||||
(amounts in millions, except per share data) | |||||||||||
Statement of Income Data: | |||||||||||
Revenue: | |||||||||||
U.S. Domestic Package | $ | 11,455 | $ | 10,437 | $ | 1,018 | 9.8 | % | |||
International Package | 3,494 | 3,478 | 16 | 0.5 | % | ||||||
Supply Chain & Freight | 3,369 | 3,529 | (160 | ) | (4.5 | )% | |||||
Total revenue | 18,318 | 17,444 | 874 | 5.0 | % | ||||||
Operating expenses: | |||||||||||
Compensation and benefits | 9,590 | 9,015 | 575 | 6.4 | % | ||||||
Other | 6,600 | 6,702 | (102 | ) | (1.5 | )% | |||||
Total operating expenses | 16,190 | 15,717 | 473 | 3.0 | % | ||||||
Operating profit: | |||||||||||
U.S. Domestic Package | 1,216 | 949 | 267 | 28.1 | % | ||||||
International Package | 667 | 536 | 131 | 24.4 | % | ||||||
Supply Chain & Freight | 245 | 242 | 3 | 1.2 | % | ||||||
Total operating profit | 2,128 | 1,727 | 401 | 23.2 | % | ||||||
Other income (expense): | |||||||||||
Other pension income (expense) | 191 | 284 | (93 | ) | (32.7 | )% | |||||
Investment income and other | 46 | 33 | 13 | 39.4 | % | ||||||
Interest expense | (159 | ) | (155 | ) | (4 | ) | 2.6 | % | |||
Total other income (expense) | 78 | 162 | (84 | ) | (51.9 | )% | |||||
Income before income taxes | 2,206 | 1,889 | 317 | 16.8 | % | ||||||
Income tax expense (benefit) | 456 | 381 | 75 | 19.7 | % | ||||||
Net income | $ | 1,750 | $ | 1,508 | $ | 242 | 16.0 | % | |||
Net income as a percentage of revenue | 9.6 | % | 8.6 | % | |||||||
Per share amounts: | |||||||||||
Basic earnings per share | $ | 2.03 | $ | 1.74 | $ | 0.29 | 16.7 | % | |||
Diluted earnings per share | $ | 2.01 | $ | 1.73 | $ | 0.28 | 16.2 | % | |||
Weighted-average shares outstanding: | |||||||||||
Basic | 864 | 865 | (1 | ) | (0.1 | )% | |||||
Diluted | 870 | 870 | — | 0.0 | % | ||||||
As adjusted income data: | |||||||||||
Operating profit: | |||||||||||
U.S. Domestic Package (1) | $ | 1,242 | $ | 988 | $ | 254 | 25.7 | % | |||
International Package (1) | 693 | 576 | 117 | 20.3 | % | ||||||
Supply Chain & Freight (1) | 256 | 260 | (4 | ) | (1.5 | )% | |||||
Total operating profit (1) | 2,191 | 1,824 | 367 | 20.1 | % | ||||||
Income before income taxes (1) | $ | 2,269 | $ | 1,986 | $ | 283 | 14.2 | % | |||
Net income (2) | $ | 1,797 | $ | 1,581 | $ | 216 | 13.7 | % | |||
Basic earnings per share (2) | $ | 2.08 | $ | 1.83 | $ | 0.25 | 13.7 | % | |||
Diluted earnings per share (2) | $ | 2.07 | $ | 1.82 | $ | 0.25 | 13.7 | % |
Three Months Ended | |||||||||||
September 30 | |||||||||||
2019 | 2018 | Change | % Change | ||||||||
Revenue (in millions): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 2,146 | $ | 1,896 | $ | 250 | 13.2 | % | |||
Deferred | 1,248 | 1,066 | 182 | 17.1 | % | ||||||
Ground | 8,061 | 7,475 | 586 | 7.8 | % | ||||||
Total U.S. Domestic Package | 11,455 | 10,437 | 1,018 | 9.8 | % | ||||||
International Package: | |||||||||||
Domestic | 689 | 678 | 11 | 1.6 | % | ||||||
Export | 2,673 | 2,654 | 19 | 0.7 | % | ||||||
Cargo and Other | 132 | 146 | (14 | ) | (9.6 | )% | |||||
Total International Package | 3,494 | 3,478 | 16 | 0.5 | % | ||||||
Supply Chain & Freight: | |||||||||||
Forwarding | 1,472 | 1,672 | (200 | ) | (12.0 | )% | |||||
Logistics | 846 | 790 | 56 | 7.1 | % | ||||||
Freight | 852 | 867 | (15 | ) | (1.7 | )% | |||||
Other | 199 | 200 | (1 | ) | (0.5 | )% | |||||
Total Supply Chain & Freight | 3,369 | 3,529 | (160 | ) | (4.5 | )% | |||||
Consolidated | $ | 18,318 | $ | 17,444 | $ | 874 | 5.0 | % | |||
Consolidated volume (in millions) | 1,345 | 1,229 | 116 | 9.4 | % | ||||||
Operating weekdays | 64 | 63 | 1 | 1.6 | % | ||||||
Average Daily Package Volume (in thousands): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | 1,891 | 1,526 | 365 | 23.9 | % | ||||||
Deferred | 1,474 | 1,256 | 218 | 17.4 | % | ||||||
Ground | 14,544 | 13,624 | 920 | 6.8 | % | ||||||
Total U.S. Domestic Package | 17,909 | 16,406 | 1,503 | 9.2 | % | ||||||
International Package: | |||||||||||
Domestic | 1,668 | 1,663 | 5 | 0.3 | % | ||||||
Export | 1,437 | 1,437 | — | 0.0 | % | ||||||
Total International Package | 3,105 | 3,100 | 5 | 0.2 | % | ||||||
Consolidated | 21,014 | 19,506 | 1,508 | 7.7 | % | ||||||
Average Revenue Per Piece: | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 17.73 | $ | 19.72 | $ | (1.99 | ) | (10.1 | )% | ||
Deferred | 13.23 | 13.47 | (0.24 | ) | (1.8 | )% | |||||
Ground | 8.66 | 8.71 | (0.05 | ) | (0.6 | )% | |||||
Total U.S. Domestic Package | 9.99 | 10.10 | (0.11 | ) | (1.1 | )% | |||||
International Package: | |||||||||||
Domestic | 6.45 | 6.47 | (0.02 | ) | (0.3 | )% | |||||
Export | 29.06 | 29.32 | (0.26 | ) | (0.9 | )% | |||||
Total International Package | 16.92 | 17.06 | (0.14 | ) | (0.8 | )% | |||||
Consolidated | $ | 11.02 | $ | 11.20 | $ | (0.18 | ) | (1.6 | )% |
Currency Neutral Revenue Per Piece | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Currency | ||||||||||||||||||||
September 30 | Neutral | ||||||||||||||||||||
2019 | 2018 | % Change | Currency | 2019* | % Change | ||||||||||||||||
Average Revenue Per Piece: | |||||||||||||||||||||
International Package: | |||||||||||||||||||||
Domestic | $ | 6.45 | $ | 6.47 | (0.3 | )% | $ | 0.17 | $ | 6.62 | 2.3 | % | |||||||||
Export | 29.06 | 29.32 | (0.9 | )% | 0.06 | 29.12 | (0.7 | )% | |||||||||||||
Total International Package | $ | 16.92 | $ | 17.06 | (0.8 | )% | $ | 0.11 | $ | 17.03 | (0.2 | )% | |||||||||
Consolidated | $ | 11.02 | $ | 11.20 | (1.6 | )% | $ | 0.01 | $ | 11.03 | (1.5 | )% | |||||||||
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences | |||||||||||||||||||||
Currency Neutral Revenue | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Currency | ||||||||||||||||||||
September 30 | Neutral | ||||||||||||||||||||
2019 | 2018 | % Change | Currency | 2019* | % Change | ||||||||||||||||
Revenue (in millions): | |||||||||||||||||||||
U.S. Domestic Package | $ | 11,455 | $ | 10,437 | 9.8 | % | $ | — | $ | 11,455 | 9.8 | % | |||||||||
International Package | 3,494 | 3,478 | 0.5 | % | 24 | 3,518 | 1.2 | % | |||||||||||||
Supply Chain & Freight | 3,369 | 3,529 | (4.5 | )% | 20 | 3,389 | (4.0 | )% | |||||||||||||
Total revenue | $ | 18,318 | $ | 17,444 | 5.0 | % | $ | 44 | $ | 18,362 | 5.3 | % | |||||||||
*Amounts adjusted for period over period foreign currency exchange rate and hedging differences | |||||||||||||||||||||
Currency Neutral Operating Profit | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Currency | ||||||||||||||||||||
September 30 | Neutral | ||||||||||||||||||||
2019* | 2018* | % Change | Currency | 2019** | % Change | ||||||||||||||||
As-Adjusted Operating Profit (in millions): | |||||||||||||||||||||
U.S. Domestic Package | $ | 1,242 | $ | 988 | 25.7 | % | $ | — | $ | 1,242 | 25.7 | % | |||||||||
International Package | 693 | 576 | 20.3 | % | (32 | ) | 661 | 14.8 | % | ||||||||||||
Supply Chain & Freight | 256 | 260 | (1.5 | )% | 7 | 263 | 1.2 | % | |||||||||||||
Total operating profit | $ | 2,191 | $ | 1,824 | 20.1 | % | $ | (25 | ) | $ | 2,166 | 18.8 | % | ||||||||
* Amounts adjusted for Transformation strategy costs | |||||||||||||||||||||
** Amounts adjusted for Transformation strategy costs and period over period foreign currency exchange rate and hedging differences |
Three Months Ended | |||||||||||
September 30 | |||||||||||
2019 | 2018 | Change | % Change | ||||||||
LTL revenue (in millions) | $ | 699 | $ | 735 | $ | (36 | ) | (4.9 | )% | ||
LTL revenue per LTL hundredweight | $ | 26.71 | $ | 25.70 | $ | 1.01 | 3.9 | % | |||
LTL shipments (in thousands) | 2,441 | 2,603 | (162 | ) | (6.2 | )% | |||||
LTL shipments per day (in thousands) | 38.1 | 41.3 | (3.2 | ) | (7.7 | )% | |||||
LTL gross weight hauled (in millions of pounds) | 2,617 | 2,860 | (243 | ) | (8.5 | )% | |||||
LTL weight per shipment (in pounds) | 1,072 | 1,098 | (26 | ) | (2.4 | )% | |||||
Operating weekdays | 64 | 63 | 1 | 1.6 | % |
Three Months Ended | ||||||||||||||
September 30 | ||||||||||||||
2019 | 2018 | Change | % Change | |||||||||||
(in millions) | ||||||||||||||
Repairs and maintenance | $ | 485 | $ | 437 | $ | 48 | 11.0 | % | ||||||
Depreciation and amortization | 587 | 524 | 63 | 12.0 | % | |||||||||
Purchased transportation | 2,984 | 3,216 | (232 | ) | (7.2 | )% | ||||||||
Fuel | 824 | 867 | (43 | ) | (5.0 | )% | ||||||||
Other occupancy | 346 | 321 | 25 | 7.8 | % | |||||||||
Other expenses | 1,374 | 1,337 | 37 | 2.8 | % | |||||||||
Total other operating expenses | $ | 6,600 | $ | 6,702 | $ | (102 | ) | (1.5 | )% |
Three Months Ended | |||||||
September 30 | |||||||
2019 | 2018 | ||||||
(amounts in millions, except per share data) | |||||||
Numerator: | |||||||
Net income | $ | 1,750 | $ | 1,508 | |||
Denominator: | |||||||
Weighted-average shares | 858 | 860 | |||||
Deferred compensation obligations | — | 1 | |||||
Vested portion of restricted units | 6 | 4 | |||||
Denominator for basic earnings (loss) per share | 864 | 865 | |||||
Effect of dilutive securities: | |||||||
Restricted units | 6 | 5 | |||||
Stock options | — | — | |||||
Denominator for diluted earnings (loss) per share | 870 | 870 | |||||
Basic earnings per share | $ | 2.03 | $ | 1.74 | |||
Diluted earnings per share | $ | 2.01 | $ | 1.73 | |||
Detail of shares outstanding as of September 30, 2019: | |||||||
Class A shares | 157 | ||||||
Class B shares | 701 | ||||||
Total shares outstanding | 858 |
Nine Months Ended | |||||||||||
September 30 | |||||||||||
2019 | 2018 | Change | % Change | ||||||||
(amounts in millions, except per share data) | |||||||||||
Statement of Income Data: | |||||||||||
Revenue: | |||||||||||
U.S. Domestic Package | $ | 33,085 | $ | 31,018 | $ | 2,067 | 6.7 | % | |||
International Package | 10,458 | 10,613 | (155 | ) | (1.5 | )% | |||||
Supply Chain & Freight | 9,983 | 10,382 | (399 | ) | (3.8 | )% | |||||
Total revenue | 53,526 | 52,013 | 1,513 | 2.9 | % | ||||||
Operating expenses: | |||||||||||
Compensation and benefits | 28,206 | 27,084 | 1,122 | 4.1 | % | ||||||
Other | 19,655 | 19,909 | (254 | ) | (1.3 | )% | |||||
Total operating expenses | 47,861 | 46,993 | 868 | 1.8 | % | ||||||
Operating profit: | |||||||||||
U.S. Domestic Package | 3,090 | 2,644 | 446 | 16.9 | % | ||||||
International Package | 1,858 | 1,748 | 110 | 6.3 | % | ||||||
Supply Chain & Freight | 717 | 628 | 89 | 14.2 | % | ||||||
Total operating profit | 5,665 | 5,020 | 645 | 12.8 | % | ||||||
Other income (expense): | |||||||||||
Other pension income (expense) | 574 | 853 | (279 | ) | (32.7 | )% | |||||
Investment income and other | 98 | 60 | 38 | 63.3 | % | ||||||
Interest expense | (487 | ) | (457 | ) | (30 | ) | 6.6 | % | |||
Total other income (expense) | 185 | 456 | (271 | ) | (59.4 | )% | |||||
Income before income taxes | 5,850 | 5,476 | 374 | 6.8 | % | ||||||
Income tax expense (benefit) | 1,304 | 1,138 | 166 | 14.6 | % | ||||||
Net income | $ | 4,546 | $ | 4,338 | $ | 208 | 4.8 | % | |||
Net income as a percentage of revenue | 8.5 | % | 8.3 | % | |||||||
Per share amounts: | |||||||||||
Basic earnings per share | $ | 5.26 | $ | 5.01 | $ | 0.25 | 5.0 | % | |||
Diluted earnings per share | $ | 5.23 | $ | 4.99 | $ | 0.24 | 4.8 | % | |||
Weighted-average shares outstanding: | |||||||||||
Basic | 865 | 866 | (1 | ) | (0.1 | )% | |||||
Diluted | 869 | 870 | (1 | ) | (0.1 | )% | |||||
As adjusted income data: | |||||||||||
Operating profit: | |||||||||||
U.S. Domestic Package (1) | $ | 3,162 | $ | 2,879 | $ | 283 | 9.8 | % | |||
International Package (1) | 1,970 | 1,824 | 146 | 8.0 | % | ||||||
Supply Chain & Freight (1) | 740 | 677 | 63 | 9.3 | % | ||||||
Total operating profit (1) | 5,872 | 5,380 | 492 | 9.1 | % | ||||||
Income before income taxes (1) | $ | 6,057 | $ | 5,836 | $ | 221 | 3.8 | % | |||
Net income (2) | $ | 4,703 | $ | 4,611 | $ | 92 | 2.0 | % | |||
Basic earnings per share (2) | $ | 5.44 | $ | 5.33 | $ | 0.11 | 2.1 | % | |||
Diluted earnings per share (2) | $ | 5.41 | $ | 5.30 | $ | 0.11 | 2.1 | % |
Nine Months Ended | |||||||||||
September 30 | |||||||||||
2019 | 2018 | Change | % Change | ||||||||
Revenue (in millions): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 6,160 | $ | 5,510 | $ | 650 | 11.8 | % | |||
Deferred | 3,494 | 3,215 | 279 | 8.7 | % | ||||||
Ground | 23,431 | 22,293 | 1,138 | 5.1 | % | ||||||
Total U.S. Domestic Package | 33,085 | 31,018 | 2,067 | 6.7 | % | ||||||
International Package: | |||||||||||
Domestic | 2,069 | 2,094 | (25 | ) | (1.2 | )% | |||||
Export | 7,972 | 8,073 | (101 | ) | (1.3 | )% | |||||
Cargo and Other | 417 | 446 | (29 | ) | (6.5 | )% | |||||
Total International Package | 10,458 | 10,613 | (155 | ) | (1.5 | )% | |||||
Supply Chain & Freight: | |||||||||||
Forwarding | 4,384 | 4,936 | (552 | ) | (11.2 | )% | |||||
Logistics | 2,511 | 2,356 | 155 | 6.6 | % | ||||||
Freight | 2,486 | 2,497 | (11 | ) | (0.4 | )% | |||||
Other | 602 | 593 | 9 | 1.5 | % | ||||||
Total Supply Chain & Freight | 9,983 | 10,382 | (399 | ) | (3.8 | )% | |||||
Consolidated | $ | 53,526 | $ | 52,013 | $ | 1,513 | 2.9 | % | |||
Consolidated volume (in millions) | 3,885 | 3,696 | 189 | 5.1 | % | ||||||
Operating weekdays | 191 | 191 | — | 0.0 | % | ||||||
Average Daily Package Volume (in thousands): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | 1,771 | 1,462 | 309 | 21.1 | % | ||||||
Deferred | 1,413 | 1,260 | 153 | 12.1 | % | ||||||
Ground | 14,068 | 13,529 | 539 | 4.0 | % | ||||||
Total U.S. Domestic Package | 17,252 | 16,251 | 1,001 | 6.2 | % | ||||||
International Package: | |||||||||||
Domestic | 1,661 | 1,662 | (1 | ) | (0.1 | )% | |||||
Export | 1,425 | 1,436 | (11 | ) | (0.8 | )% | |||||
Total International Package | 3,086 | 3,098 | (12 | ) | (0.4 | )% | |||||
Consolidated | 20,338 | 19,349 | 989 | 5.1 | % | ||||||
Average Revenue Per Piece: | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 18.21 | $ | 19.73 | $ | (1.52 | ) | (7.7 | )% | ||
Deferred | 12.95 | 13.36 | (0.41 | ) | (3.1 | )% | |||||
Ground | 8.72 | 8.63 | 0.09 | 1.0 | % | ||||||
Total U.S. Domestic Package | 10.04 | 9.99 | 0.05 | 0.5 | % | ||||||
International Package: | |||||||||||
Domestic | 6.52 | 6.60 | (0.08 | ) | (1.2 | )% | |||||
Export | 29.29 | 29.43 | (0.14 | ) | (0.5 | )% | |||||
Total International Package | 17.04 | 17.18 | (0.14 | ) | (0.8 | )% | |||||
Consolidated | $ | 11.10 | $ | 11.14 | $ | (0.04 | ) | (0.4 | )% |
Currency Neutral Revenue Per Piece | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Nine Months Ended | Currency | ||||||||||||||||||||
September 30 | Neutral | ||||||||||||||||||||
2019 | 2018 | % Change | Currency | 2019* | % Change | ||||||||||||||||
Average Revenue Per Piece: | |||||||||||||||||||||
International Package: | |||||||||||||||||||||
Domestic | $ | 6.52 | $ | 6.60 | (1.2 | )% | $ | 0.33 | $ | 6.85 | 3.8 | % | |||||||||
Export | 29.29 | 29.43 | (0.5 | )% | 0.43 | 29.72 | 1.0 | % | |||||||||||||
Total International Package | $ | 17.04 | $ | 17.18 | (0.8 | )% | $ | 0.37 | $ | 17.41 | 1.3 | % | |||||||||
Consolidated | $ | 11.10 |