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8-K - 8-K - UNITED PARCEL SERVICE INCd341195d8k.htm

Exhibit 99.1

For Immediate Release

 

Contacts:    Norman Black, Public Relations
   404-828-7593
   Andy Dolny, Investor Relations
   404-828-8901

UPS 1Q EARNINGS PER SHARE GROW 10%

U.S. Domestic and Supply Chain & Freight Segments

Post Double-Digit Gains in Operating Profit

ATLANTA, April 26, 2012 – UPS (NYSE:UPS) today announced first quarter 2012 diluted earnings per share of $1.00, a 10% improvement over the prior-year period. Consolidated revenue increased 4.4% to $13.1 billion. Operating profit for the U.S. Domestic and Supply Chain and Freight segments increased 13% and 19%, respectively.

“These results demonstrate that UPS is providing its customers with the solutions needed for today’s ever-changing market conditions,” said Scott Davis, UPS chairman and CEO. “We will continue to invest and develop innovative services that facilitate global commerce, ensuring UPS’s long-term success.”

 

Consolidated Results

   1Q 2012     1Q 2011  

Revenue

   $ 13.14  B    $ 12.58  B 

Operating profit

   $ 1.57  B    $ 1.47  B 

Operating margin

     11.9     11.7

Average volume per day

     15.6  M      15.0  M 

Diluted earnings per share

   $ 1.00      $ 0.91   

During the period, UPS delivered approximately 1 billion packages, a 4.3% increase. Rapid e-commerce growth combined with growing demand for lightweight shipping solutions contributed to these results.

In March, UPS announced its intention to acquire TNT Express. This addition will further expand UPS’s portfolio of solutions and geographic footprint. The complementary strengths of both organizations will create a customer-focused global platform and a leader in the logistics industry.

 

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Cash Position

For the quarter ending March 31, UPS generated $1.8 billion in free cash flow. Capital expenditures were $417 million, including the delivery of three B-767 aircraft. UPS repurchased 7.1 million shares for approximately $550 million and paid dividends totaling $534 million.

In February, UPS announced a 10% increase in its regular quarterly dividend to $0.57 per share. The company has maintained or increased its dividend for more than four decades and has more than tripled the payout since going public in 1999.

 

U.S. Domestic Package

   1Q 2012     1Q 2011  

Revenue

   $ 8.00  B    $ 7.54  B 

Operating profit

   $ 995  M    $ 880  M 

Operating margin

     12.4     11.7

Average volume per day

     13.24  M      12.67  M 

For the quarter, U.S. Domestic revenue increased 6.1% driven by daily volume growth of 4.5%. Operating profit improved 13% over the prior year period with margin expansion of 70 basis points.

Daily volume for deferred products jumped 9.9% and UPS Next Day Air® volume climbed 5%, driven primarily by on-line retail growth. Ground volume improved 4% on strong demand for lightweight shipping options.

Increases in revenue per piece produced by higher base rates and fuel surcharges were mostly offset by changing product and customer mix as e-commerce continued to drive volume growth.

During the quarter, the company achieved a milestone when the millionth user enrolled in UPS My Choicesm, the unique consumer-based delivery solution that UPS rolled out in October 2011. My Choicesm users received more than 7 million shipments and used the service to conveniently control the delivery of 1 million packages.

 

International Package

   1Q 2012     1Q 2011  

Revenue

   $ 2.97  B    $ 2.90  B 

Operating profit

   $ 408  M    $ 453  M 

Operating margin

     13.8     15.6

Average volume per day

     2.35  M      2.29  M 

International revenue was $2.97 billion, an increase of 2.3% compared to the same period last year. Revenue per piece was down slightly, though up 2% on a currency-neutral basis. Continued weakness out of Asia and increased intra-regional volumes also negatively impacted yield growth.

 

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UPS Export volume growth continued to outpace the market at 5.4%, with solid gains in Europe, intra-Asia and Mexico. Operating margin declined to 13.8%, reflecting the impact of increased fuel cost, changing product mix and shifting trade patterns.

During the quarter, UPS increased cargo capacity by more than 50 percent on 20 weekly flights in Latin America and expanded its air infrastructure for western Mexico by establishing a regular flight to Guadalajara.

 

Supply Chain & Freight

   1Q 2012     1Q 2011  

Revenue

   $ 2.17  B    $ 2.14  B 

Operating profit

   $ 166  M    $ 139  M 

Operating margin

     7.7     6.5

Operating profit in the Supply Chain and Freight segment climbed 19% on revenue growth of 1.3%. Operating margin expanded 120 basis points to 7.7%.

Operating margin in the Forwarding business expanded due to growth in customized solutions and brokerage services, in addition to improved productivity. However, revenue was negatively impacted by declines in both tonnage and yield as excess capacity in the market continues.

Demand for UPS healthcare solutions drove revenue gains in the Logistics business unit. Operating margin expanded despite the impact of continued investment in the healthcare network.

Earlier this month, UPS announced an industry-first expedited heavy freight option for shipments between the U.S. and Mexico. UPS CrossBorder Connect™ now allows customers to ship heavy freight on the ground and realize improved transit times over traditional LTL carriers.

Outlook

“UPS delivered earnings growth in line with our expectations, driven by the results of the U.S. Domestic and Supply Chain and Freight segments,” said Kurt Kuehn, UPS’s chief financial officer. “Our performance reflects the strength of our global portfolio and the adaptability of the UPS operating model. Therefore, we remain confident in our previous guidance for 2012 diluted earnings per share of $4.75 to $5.00, an increase of 9%-to-15% over 2011 adjusted results.”

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 first quarter results with investors and analysts during a conference call at 8:30 a.m. EDT 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.


United Parcel Service, Inc.

Selected Financial Data - First Quarter

(unaudited)

 

     Three Months Ended
March 31,
    Change  
     2012     2011     $     %  
(amounts in millions, except per share data)                         

Statement of Income Data:

        

Revenue:

        

U.S. Domestic Package

   $ 8,004      $ 7,543      $ 461        6.1

International Package

     2,966        2,900        66        2.3

Supply Chain & Freight

     2,166        2,139        27        1.3
  

 

 

   

 

 

   

 

 

   

Total revenue

     13,136        12,582        554        4.4

Operating expenses:

        

Compensation and benefits

     6,835        6,562        273        4.2

Other

     4,732        4,548        184        4.0
  

 

 

   

 

 

   

 

 

   

Total operating expenses

     11,567        11,110        457        4.1

Operating profit:

        

U.S. Domestic Package

     995        880        115        13.1

International Package

     408        453        (45     -9.9

Supply Chain & Freight

     166        139        27        19.4
  

 

 

   

 

 

   

 

 

   

Total operating profit

     1,569        1,472        97        6.6

Other income (expense):

        

Investment income

     6        11        (5     -45.5

Interest expense

     (94     (85     (9     10.6
  

 

 

   

 

 

   

 

 

   

Total other income (expense)

     (88     (74     (14     18.9
  

 

 

   

 

 

   

 

 

   

Income before income taxes

     1,481        1,398        83        5.9

Income tax expense

     511        483        28        5.8
  

 

 

   

 

 

   

 

 

   

Net income

   $ 970      $ 915      $ 55        6.0
  

 

 

   

 

 

   

 

 

   

Net income as a percentage of revenue

     7.4     7.3    

Per share amounts

        

Basic earnings per share

   $ 1.01      $ 0.92      $ 0.09        9.8

Diluted earnings per share

   $ 1.00      $ 0.91      $ 0.09        9.9

Weighted-average shares outstanding

        

Basic

     962        992        (30     -3.0

Diluted

     972        1,002        (30     -3.0

 

Certain prior year amounts have been reclassified to conform to the current year presentation.    1


United Parcel Service, Inc.

Selected Financial Data - First Quarter

(unaudited)

 

     Three Months Ended
March 31,
     Change  
     2012      2011      $ / #     %  

Revenue (in millions):

          

U.S. Domestic Package:

          

Next Day Air

   $ 1,557       $ 1,495       $ 62        4.1

Deferred

     820         753         67        8.9

Ground

     5,627         5,295         332        6.3
  

 

 

    

 

 

    

 

 

   

Total U.S. Domestic Package

     8,004         7,543         461        6.1

International Package:

          

Domestic

     640         629         11        1.7

Export

     2,195         2,131         64        3.0

Cargo

     131         140         (9     -6.4
  

 

 

    

 

 

    

 

 

   

Total International Package

     2,966         2,900         66        2.3

Supply Chain & Freight:

          

Forwarding and Logistics

     1,424         1,429         (5     -0.3

Freight

     618         604         14        2.3

Other

     124         106         18        17.0
  

 

 

    

 

 

    

 

 

   

Total Supply Chain & Freight

     2,166         2,139         27        1.3
  

 

 

    

 

 

    

 

 

   

Consolidated

   $ 13,136       $ 12,582       $ 554        4.4
  

 

 

    

 

 

    

 

 

   

Consolidated volume (in millions)

     998         957         41        4.3

Operating weekdays

     64         64         —       

Average Daily Package Volume (in thousands):

          

U.S. Domestic Package:

          

Next Day Air

     1,213         1,155         58        5.0

Deferred

     985         896         89        9.9

Ground

     11,042         10,618         424        4.0
  

 

 

    

 

 

    

 

 

   

Total U.S. Domestic Package

     13,240         12,669         571        4.5

International Package:

          

Domestic

     1,409         1,393         16        1.1

Export

     943         895         48        5.4
  

 

 

    

 

 

    

 

 

   

Total International Package

     2,352         2,288         64        2.8
  

 

 

    

 

 

    

 

 

   

Consolidated

     15,592         14,957         635        4.3
  

 

 

    

 

 

    

 

 

   

Average Revenue Per Piece:

          

U.S. Domestic Package:

          

Next Day Air

   $ 20.06       $ 20.22       $ (0.16     -0.8

Deferred

     13.01         13.13         (0.12     -0.9

Ground

     7.96         7.79         0.17        2.2

Total U.S. Domestic Package

     9.45         9.30         0.15        1.6

International Package:

          

Domestic

     7.10         7.06         0.04        0.6

Export

     36.37         37.20         (0.83     -2.2

Total International Package

     18.83         18.85         (0.02     -0.1

Consolidated

   $ 10.86       $ 10.76       $ 0.10        0.9
  

 

 

    

 

 

    

 

 

   

 

Certain prior year amounts have been reclassified to conform to the current year presentation.    2


United Parcel Service, Inc.

Reconciliation of Free Cash Flow

(unaudited)

 

(amounts in millions)    Preliminary
Year-to-Date
March 31, 2012
 

Net cash from operations

   $ 2,250   

Capital expenditures

     (417

Proceeds from disposals of PP&E

     25   

Net change in finance receivables

     24   

Other investing activities

     (76
  

 

 

 

Free cash flow

   $ 1,806   
  

 

 

 

Amounts are subject to reclassification.

 

Certain prior year amounts have been reclassified to conform to the current year presentation.    3