UPS Achieves Record Earnings Per Share
UPS Achieves Record Earnings Per Share
2012 Free Cash Flow $5.4 Billion; Expects 2013 EPS growth 6-to-12%; $4 Billion
in Share Repurchases
Business Wire
ATLANTA -- January 31, 2013
UPS (NYSE:UPS) today announced record 2012 fourth quarter and full year
adjusted diluted earnings per share of $1.32 and $4.53 respectively, with the
U.S. Domestic segment leading the way. The company generated annual free cash
flow of approximately $5.4 billion, a testament to operations execution and
the emphasis UPS places on capital efficiency. UPS estimates that Hurricane
Sandy reduced earnings per share by approximately $0.05.
UPS recorded a fourth quarter mark-to-market, non-cash, after-tax charge of
$3.0 billion for its company-sponsored pension and post-retirement benefit
plans. Although the plans exceeded their expected rate of return, these
incremental gains were more than offset by a 120 basis point decline in
year-end discount rates. As a result, on a GAAP basis, diluted earnings per
share for the quarter fell to a loss of $1.83. For the full year, reported
diluted earnings per share were $0.83. This adjustment does not affect cash
flow, required pension funding or benefits paid to plan participants.
“2012 presented its challenges, most notably weak global trade. Nonetheless,
UPS executed well, delivering superior service to customers,” said Scott
Davis, UPS Chairman and CEO. “Despite modest macro growth expectations for
2013 and uncertainty in the U.S. caused by the lack of progress in Washington,
the UPS business model will deliver consistent results, with operating profit
growth in all segments.”
UPS expects full year earnings per share to be within a range of $4.80 -
$5.06, an increase of 6-to-12% compared to 2012 adjusted results. The company
also raised guidance for 2013 share repurchases from $1.5 billion to $4.0
billion.
Adjusted Adjusted
Consolidated Results 4Q 2012 4Q 2012 4Q 2011 4Q 2011
Revenue $14.57 B $14.17 B
Operating profit (loss) ($2.78 B ) $2.05 B $1.20 B $2.02 B
Operating margin (19.1 % ) 14.1 % 8.4 % 14.3 %
Average volume per day 18.8 M 18.3 M
Diluted earnings (loss) ($1.83 ) $1.32 $0.74 $1.28
per share
During the year, UPS delivered more than four billion packages. For the
quarter, it delivered 18.8 million pieces per day, an increase of 2.9% over
the prior-year period.
Overall consumer spending for holiday shopping fell slightly below
expectations, however; UPS still delivered more than 500 million packages,
including almost 28 million on its peak day, both new records.
Cash Position
For the year ending Dec. 31, UPS generated $5.4 billion in free cash flow
after capital expenditures of $2.2 billion. UPS repurchased 21.8 million
shares for approximately $1.6 billion and paid dividends totaling $2.1
billion, up 9.6% per share.
Adjusted Adjusted
U.S. Domestic Package 4Q 2012 4Q 2012 4Q 2011 4Q 2011
Revenue $8.93 B $8.67 B
Operating profit (loss) ($1.80 B ) $1.38 B $0.84 B $1.32 B
Operating margin (20.1 % ) 15.4% 9.7 % 15.2 %
Average volume per day 16.2 M 15.7 M
As on-line retailers continue to rely on UPS to serve their customers, daily
package volume was up 3.0%, led by 7.7% growth in UPS Next Day Air®, while
ground improved 3.0%.
On an adjusted basis, operating profit increased $58 million or 4.4%, and
operating margin expanded to 15.4%, despite challenges created by Hurricane
Sandy. Revenue grew 3.0% and revenue per piece increased 1.7%, driven by base
rate improvements in both ground and air products.
As a result of the pension mark-to-market adjustment, the segment reported an
operating loss of $1.8 billion, on a U.S. GAAP basis.
This holiday season, the B2C market took advantage of the unique consumer
experience offered by UPS My Choice. Reflecting its popularity, subscribers
have grown to almost 2.5 million. This innovative service reduces missed
deliveries to customers and lowers UPS operating costs.
Adjusted Adjusted
International Package 4Q 2012 4Q 2012 4Q 2011 4Q 2011
Revenue $3.20 B $3.15 B
Operating profit (loss) ($442 M ) $499 M $334 M $505 M
Operating margin (13.8 % ) 15.6 % 10.6 % 16.0 %
Average volume per day 2.7 M 2.6 M
Strong demand for UPS products in Asia and Europe led to a 5.5% increase in
average daily export volume, increasing revenue to $3.2 billion.
Adjusted operating profit was $499 million, down slightly, as customer and
product mix changes drove a 3.5% decline in export yields, on a currency
neutral basis. Adjusted operating margin of 15.6% remains industry leading.
As a result of the pension mark-to-market adjustment, the segment reported an
operating loss of $442 million, on a U.S. GAAP basis.
Earlier this month, UPS announced a new express air freight service, UPS
Worldwide Express Freight™, for urgent, time-sensitive and high-value
international heavyweight shipments. This new service is an extension of the
UPS Worldwide Express package portfolio and offers customers a seamless
experience between shipping express package and express freight.
Adjusted Adjusted
Supply Chain & Freight 4Q 2012 4Q 2012 4Q 2011 4Q 2011
Revenue $2.44 B $2.34 B
Operating profit (loss) ($541 M ) $ 172 M $ 22 M $ 199 M
Operating margin (22.2 % ) 7.1 % 0.9 % 8.5 %
Revenue in the Supply Chain & Freight segment increased $94 million or 4.0%
compared with the fourth quarter of 2011. Adjusted operating profit was $172
million.
As a result of the pension mark-to-market adjustment, the segment reported an
operating loss of $541 million, on a U.S. GAAP basis.
The Freight Forwarding unit experienced revenue improvement on strong tonnage
increases in international air freight. Operating margin was negatively
impacted by an increase in purchased transportation rates on Asia outbound
freight during a period of accelerated demand in the market.
The Distribution business unit achieved revenue growth of more than 10% as UPS
continued to meet customers’ needs for optimal supply chain management and
value added services. Although operating margin was still strong, it declined
due to investments in technology and new facilities to support the Healthcare
and High Tech industries.
UPS Freight revenue increased 6.2% with LTL gross weight hauled up 4.9% and
LTL revenue per hundredweight up 1.5%.
During the quarter, UPS launched an innovative ocean and air freight
forwarding technology platform, UPS Order Watch, enhancing the UPS Supplier
Management product with cloud-based capabilities that allow customers to more
efficiently manage their international inbound supply chains.
Outlook
“UPS delivered its best ever adjusted earnings per share with strong free cash
flow, even in the midst of weaker than expected global economic conditions in
2012,” said Kurt Kuehn, UPS chief financial officer. “Economic growth for 2013
is expected to be below long-term trends. Despite $350 million in headwinds
from unfavorable foreign exchange comparisons and increased pension expense,
UPS anticipates full year diluted earnings per share to increase 6% to 12%
over 2012 adjusted results.
“Free cash flow remains a UPS hallmark, creating opportunities for significant
distributions to shareholders,” Kuehn added. “Based on our strong financial
position, UPS has increased expected share repurchases for 2013 from $1.5
billion to $4.0 billion.”
UPS (NYSE:UPS) is a global leader in logistics, offering a broad range of
solutions including the transportation of packages and freight; the
facilitation of international trade, and the deployment of advanced technology
to more efficiently manage the world of business. 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
blog.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS.
EDITOR’S NOTE:
UPS Chairman and CEO Scott Davis and CFO Kurt Kuehn will discuss fourth
quarter results with investors and analysts during a conference call at 8:30
a.m. EST today. That call is open to listeners through a live Webcast. To
access the call, go to www.investors.ups.com and click on “Earnings Webcast.”
UPS routinely posts investor announcements on its web site
--www.investors.ups.com -- and encourages those interested in the company to
check there frequently.
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.” We believe that these adjusted measures provide
meaningful information to assist investors and analysts in understanding our
financial results and assessing our prospects for future performance. We
believe these adjusted financial measures are important indicators of our
recurring operations because they exclude items that may not be indicative of,
or are unrelated to, our core operating results, and provide a better baseline
for analyzing trends in our underlying businesses. Furthermore, we use these
adjusted financial measures to determine awards for our management personnel
under our incentive compensation plans.
We supplemented the presentation of our fourth quarter and year-to-date 2012
and 2011 operating profit, operating margin, pre-tax income, net income and
earnings per share with similar measures that excluded the impact of certain
transactions. During 2012, these items included the impact of mark-to-market
adjustments for pension expense recognized outside of a 10% corridor ($4.831
billion pre-tax charge) and the establishment of a withdrawal liability
related to the New England Teamsters and Trucking Industry Pension Fund ($896
million pre-tax charge) . In 2011, these items included the impact of certain
real estate transactions ($33 million pre-tax gains) and mark-to-market
adjustments for pension expense recognized outside of a 10% corridor ($827
million pre-tax charge). We believe these adjusted measures better enable
shareowners to focus on period-over-period operating performance.
Because non-GAAP financial measures are not standardized, it may not be
possible to compare these financial measures with other companies' non-GAAP
financial measures having the same or similar names. These adjusted financial
measures should not be considered in isolation or as a substitute for GAAP
operating profit, operating margin, net income and earnings per share, the
most directly comparable GAAP financial measures. These non-GAAP financial
measures reflect an additional way of viewing aspects of our operations that,
when viewed with our GAAP results and the preceding reconciliations to
corresponding GAAP financial measures, provide a more complete understanding
of our business. We strongly encourage investors to review our financial
statements and publicly-filed reports in their entirety and not to rely on any
single financial measure.
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, our competitive environment, 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.
United Parcel Service, Inc.
Selected Financial Data - Fourth Quarter
(unaudited)
Three Months Ended
December 31, Change
2012 2011 $ %
[(amounts in
millions, except per
share data)]
Statement of Income
Data:
Revenue:
U.S. Domestic Package $ 8,933 $ 8,670 $ 263 3.0 %
International Package 3,201 3,153 48 1.5 %
Supply Chain & 2,437 2,343 94 4.0 %
Freight
Total revenue 14,571 14,166 405 2.9 %
Operating expenses:
Compensation and 11,943 7,730 4,213 54.5 %
benefits
Other 5,410 5,239 171 3.3 %
Total operating 17,353 12,969 4,384 33.8 %
expenses
Operating profit
(loss):
U.S. Domestic Package (1,799 ) 841 (2,640 ) N/A
International Package (442 ) 334 (776 ) N/A
Supply Chain & (541 ) 22 (563 ) N/A
Freight
Total operating (2,782 ) 1,197 (3,979 ) N/A
profit (loss)
Other income
(expense):
Investment income 6 8 (2 ) -25.0 %
Interest expense (109 ) (96 ) (13 ) 13.5 %
Total other income (103 ) (88 ) (15 ) 17.0 %
(expense)
Income (loss) before (2,885 ) 1,109 (3,994 ) N/A
income taxes
Income tax expense (1,137 ) 384 (1,521 ) N/A
(benefit)
Net income (loss) $ (1,748 ) $ 725 $ (2,473 ) N/A
Net income (loss) as
a percentage of -12.0 % 5.1 %
revenue
Per share amounts
Basic earnings (loss) $ (1.83 ) $ 0.75 $ (2.58 ) N/A
per share
Diluted earnings $ (1.83 ) $ 0.74 $ (2.57 ) N/A
(loss) per share
Weighted-average
shares outstanding
Basic 956 968 (12 ) -1.2 %
Diluted 956 977 (21 ) -2.1 %
As adjusted income
data:
Operating profit:
U.S. Domestic Package $ 1,378 $ 1,320 $ 58 4.4 %
(1)
International Package 499 505 (6 ) -1.2 %
(1)
Supply Chain & 172 199 (27 ) -13.6 %
Freight (1)
Total operating 2,049 2,024 25 1.2 %
profit (1)
Income before income $ 1,946 $ 1,936 $ 10 0.5 %
taxes (1)
Net income (2) $ 1,275 $ 1,252 $ 23 1.8 %
Basic earnings per $ 1.33 $ 1.29 $ 0.04 3.1 %
share (2)
Diluted earnings per $ 1.32 $ 1.28 $ 0.04 3.1 %
share (2)
(1) 2012 operating profit and consolidated income before income taxes exclude
the impact of an increase in pension expense due to a mark-to-market loss
recognized outside of a 10% corridor of $4.831 billion, allocated between the
U.S. Domestic Package segment ($3.177 billion), International Package segment
($941 million), and Supply Chain & Freight segment ($713 million).
2011 operating profit and consolidated income before income taxes exclude the
impact of an increase in pension expense due to a mark-to-market loss
recognized outside of a 10% corridor of $827 million, allocated between the
U.S. Domestic Package segment ($479 million), International Package segment
($171 million), and Supply Chain & Freight segment ($177 million).
(2) Fourth quarter 2012 and 2011 net income and earnings per share amounts
exclude the impact of the pension mark-to-market adjustment described in (1),
which decreased net income by $3.023 billion and $527 million, respectively.
4th quarter 2012 adjusted diluted earnings per share is based on
weighted-average shares outstanding of 965 million.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
United Parcel Service, Inc.
Selected Operating Data - Fourth Quarter
(unaudited)
Three Months Ended
December 31, Change
2012 2011 $/ # %
Revenue (in millions):
U.S. Domestic Package:
Next Day Air $ 1,669 $ 1,584 $ 85 5.4 %
Deferred 992 1,022 (30 ) -2.9 %
Ground 6,272 6,064 208 3.4 %
Total U.S. Domestic 8,933 8,670 263 3.0 %
Package
International Package:
Domestic 676 667 9 1.3 %
Export 2,391 2,358 33 1.4 %
Cargo 134 128 6 4.7 %
Total International 3,201 3,153 48 1.5 %
Package
Supply Chain & Freight:
Forwarding and Logistics 1,623 1,583 40 2.5 %
Freight 671 632 39 6.2 %
Other 143 128 15 11.7 %
Total Supply Chain & 2,437 2,343 94 4.0 %
Freight
Consolidated $ 14,571 $ 14,166 $ 405 2.9 %
Consolidated volume (in 1,148 1,134 14 1.2 %
millions)
Operating weekdays 61 62 (1 )
Average Daily Package
Volume (in thousands):
U.S. Domestic Package:
Next Day Air 1,405 1,305 100 7.7 %
Deferred 1,296 1,314 (18 ) -1.4 %
Ground 13,461 13,068 393 3.0 %
Total U.S. Domestic 16,162 15,687 475 3.0 %
Package
International Package:
Domestic 1,559 1,559 - 0.0 %
Export 1,100 1,043 57 5.5 %
Total International 2,659 2,602 57 2.2 %
Package
Consolidated 18,821 18,289 532 2.9 %
Average Revenue Per
Piece:
U.S. Domestic Package:
Next Day Air $ 19.47 $ 19.58 $ (0.11 ) -0.6 %
Deferred 12.55 12.54 0.01 0.1 %
Ground 7.64 7.48 0.16 2.1 %
Total U.S. Domestic 9.06 8.91 0.15 1.7 %
Package
International Package:
Domestic 7.11 6.90 0.21 3.0 %
Export 35.63 36.46 (0.83 ) -2.3 %
Total International 18.91 18.75 0.16 0.9 %
Package
Consolidated $ 10.45 $ 10.31 $ 0.14 1.4 %
Certain prior year amounts have been reclassified to conform to the current
year presentation.
United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
Twelve Months Ended
December 31, Change
2012 2011 $ %
[(amounts in
millions, except per
share data)]
Statement of Income
Data:
Revenue:
U.S. Domestic Package $ 32,856 $ 31,717 $ 1,139 3.6 %
International Package 12,124 12,249 (125 ) -1.0 %
Supply Chain & 9,147 9,139 8 0.1 %
Freight
Total revenue 54,127 53,105 1,022 1.9 %
Operating expenses:
Compensation and 33,102 27,575 5,527 20.0 %
benefits
Other 19,682 19,450 232 1.2 %
Total operating 52,784 47,025 5,759 12.2 %
expenses
Operating profit:
U.S. Domestic Package 459 3,764 (3,305 ) -87.8 %
International Package 869 1,709 (840 ) -49.2 %
Supply Chain & 15 607 (592 ) -97.5 %
Freight
Total operating 1,343 6,080 (4,737 ) -77.9 %
profit
Other income
(expense):
Investment income 24 44 (20 ) -45.5 %
Interest expense (393 ) (348 ) (45 ) 12.9 %
Total other income (369 ) (304 ) (65 ) 21.4 %
(expense)
Income before income 974 5,776 (4,802 ) -83.1 %
taxes
Income tax expense 167 1,972 (1,805 ) -91.5 %
Net income $ 807 $ 3,804 $ (2,997 ) -78.8 %
Net income as a 1.5 % 7.2 %
percentage of revenue
Per share amounts
Basic earnings per $ 0.84 $ 3.88 $ (3.04 ) -78.4 %
share
Diluted earnings per $ 0.83 $ 3.84 $ (3.01 ) -78.4 %
share
Weighted-average
shares outstanding
Basic 960 981 (21 ) -2.1 %
Diluted 969 991 (22 ) -2.2 %
As adjusted income
data:
Operating profit:
U.S. Domestic Package $ 4,532 $ 4,258 $ 274 6.4 %
(1)
International Package 1,810 1,880 (70 ) -3.7 %
(1)
Supply Chain & 728 736 (8 ) -1.1 %
Freight (1)
Total operating 7,070 6,874 196 2.9 %
profit
Income before income $ 6,701 $ 6,570 $ 131 2.0 %
taxes (1)
Net income (2) $ 4,389 $ 4,311 $ 78 1.8 %
Basic earnings per $ 4.57 $ 4.39 $ 0.18 4.1 %
share (2)
Diluted earnings per $ 4.53 $ 4.35 $ 0.18 4.1 %
share (2)
(1) 2012 operating profit and consolidated income before income taxes exclude
the impact of an increase in pension expense due to a mark-to-market loss
recognized outside of a 10% corridor of $4.831 billion, allocated between the
U.S. Domestic Package segment ($3.177 billion), International Package segment
($941 million), and Supply Chain & Freight segment ($713 million). 2012 also
excludes an $896 million pre-tax charge from the withdrawal liability
associated with restructuring a multiemployer pension plan in the U.S.
Domestic Package segment.
2011 operating profit and consolidated income before income taxes exclude the
impact of an increase in pension expense due to a mark-to-market loss
recognized outside of a 10% corridor of $827 million, allocated between the
U.S. Domestic Package segment ($479 million), International Package segment
($171 million), and Supply Chain & Freight segment ($177 million). 2011
operating profit and consolidated income before income taxes also excludes a
$33 million gain on certain real estate transactions ($15 million loss in U.S.
Domestic Package and a $48 million gain in Supply Chain & Freight).
(2) 2012 net income and earnings per share amounts exclude the after tax
impact of the adjustments described in (1), which combined to a decrease in
net income by $3.582 billion.
2011 net income and earnings per share amounts exclude the after tax impact of
the adjustments
described in (1), which combined to a decrease net income by $507 million.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
Twelve Months Ended
December 31, Change
2012 2011 $/ # %
Revenue (in millions):
U.S. Domestic Package:
Next Day Air $ 6,412 $ 6,229 $ 183 2.9 %
Deferred 3,392 3,299 93 2.8 %
Ground 23,052 22,189 863 3.9 %
Total U.S. Domestic Package 32,856 31,717 1,139 3.6 %
International Package:
Domestic 2,531 2,628 (97 ) -3.7 %
Export 9,033 9,056 (23 ) -0.3 %
Cargo 560 565 (5 ) -0.9 %
Total International Package 12,124 12,249 (125 ) -1.0 %
Supply Chain & Freight:
Forwarding and Logistics 5,977 6,103 (126 ) -2.1 %
Freight 2,640 2,563 77 3.0 %
Other 530 473 57 12.1 %
Total Supply Chain & 9,147 9,139 8 0.1 %
Freight
Consolidated $ 54,127 $ 53,105 $ 1,022 1.9 %
Consolidated volume (in 4,107 4,013 94 2.3 %
millions)
Operating weekdays 252 254 (2 )
Average Daily Package
Volume (in thousands):
U.S. Domestic Package:
Next Day Air 1,277 1,206 71 5.9 %
Deferred 1,031 975 56 5.7 %
Ground 11,588 11,230 358 3.2 %
Total U.S. Domestic Package 13,896 13,411 485 3.6 %
International Package:
Domestic 1,427 1,444 (17 ) -1.2 %
Export 972 942 30 3.2 %
Total International Package 2,399 2,386 13 0.5 %
Consolidated 16,295 15,797 498 3.2 %
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air $ 19.93 $ 20.33 $ (0.40 ) -2.0 %
Deferred 13.06 13.32 (0.26 ) -2.0 %
Ground 7.89 7.78 0.11 1.4 %
Total U.S. Domestic Package 9.38 9.31 0.07 0.8 %
International Package:
Domestic 7.04 7.17 (0.13 ) -1.8 %
Export 36.88 37.85 (0.97 ) -2.6 %
Total International Package 19.13 19.28 (0.15 ) -0.8 %
Consolidated $ 10.82 $ 10.82 $ - 0.0 %
Certain prior year amounts have been reclassified to conform to the current
year presentation.
United Parcel Service, Inc.
Reconciliation of Free Cash Flow
(unaudited)
Preliminary
Year-to-Date
(amounts in millions) December 31,
Net cash from operations $ 7,213
Capital expenditures (2,153 )
Proceeds from disposals of PP&E 95
Net change in finance receivables 101
Other investing activities 97
Free cash flow $ 5,353
Amounts are subject to reclassification.
Certain prior year amounts have been reclassified to conform to the current
year presentation.
Contact:
UPS
Mark Dickens, Public Relations
404-828-8428
or
Andy Dolny, Investor Relations
404-828-8901
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page