Execution, Strategies and Investments Drive Continued Gains and Uniquely Position UPS for Future Success
· 4Q19 Operating Profit Growth and Margin Expansion in All Segments
· 4Q19 Positive Operating Leverage Driven by Lower Unit Cost in the U.S.
· 4Q19 Diluted EPS of ($0.12); Adjusted* Diluted 4Q19 EPS Up 8.8% to $2.11
· 4Q19 U.S. Daily Volume Grew Nearly 9%; Next Day Air Volume Up Nearly 26%
· 2019 Cash from Operations of $8.6B; Adjusted Free Cash Flow Topped $4.1B
· Announces Full-Year 2020 Adjusted EPS Guidance Range of $7.76 to $8.06
· Speeding up time-in-transit and broadening weekend services in 2020 to capture profitable growth from Small- and Medium-sized Businesses (SMB)
ATLANTA – UPS (NYSE:UPS) today announced fourth-quarter 2019 adjusted earnings per share of $2.11, an 8.8% increase over the same period last year. The company’s results highlight the strong volume growth in the U.S. Domestic segment and the impact of successful execution from all segments.
“Our network improvements from transformation enabled UPS to embrace a surge in demand for air products while at the same time generate productivity improvements and positive operating leverage,” said David Abney, UPS chairman and CEO.
“Looking to 2020, we will continue to adapt to the changing environment, strengthen our network and create new solutions to support our strategic growth initiatives and help our customers grow and compete.”
In the fourth quarter of 2019, the company incurred a non-cash, after-tax mark-to-market (MTM) pension charge of $1.8 billion, an after-tax transformation charge of $39 million, and U.S. Domestic after-tax legal contingency and expense charges of $91 million, predominantly related to the New York cigarette case. The total impact to EPS was $2.23 per diluted share. MTM pension charges of $1.42 per diluted share were included in the company’s fourth-quarter GAAP results in the prior-year period.
|Diluted Earnings/Loss Per Share|
* “Adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.
For the total company in 4Q 2019:
· Average daily volume levels exceeded 26.6 million packages, an increase of 7.5%, driven by high demand for air services in the U.S.
· Consolidated revenue increased 3.6% to $20.6 billion, due to strong average daily volume growth during the peak holiday season.
· Operating profit grew 6.4%, and 13.7% on an adjusted basis, with margin improvement across all segments.
U.S. Domestic Segment
The U.S. Domestic segment benefited from several transformation initiatives, including increased automated capacity and new aircraft added to the global air fleet, which positioned UPS to handle volume growth in each month of the quarter.
Total volume across all products grew nearly 9%. Growth was driven by the structural shift to faster delivery in retail and e-commerce, and from competitive wins. UPS experienced growth from a number of large and SMB customers, with the growth led by UPS’s largest customer, Amazon.
“We processed record volume during the quarter as customers took full advantage of the capabilities of our integrated network and broad portfolio of solutions,” said Abney.
“Given the tremendous opportunities ahead, we have elected to implement SMB initiatives now to speed up our network and broaden our weekend operations, actions that will improve our competitiveness and generate growth.”
$ 1,207 M
· Revenue grew $833 million, a more than 6.5% increase, with growth across all products.
· Operating profit increased 7.5%, up over 20% on an adjusted basis.
· Operating margin was 8%; adjusted operating margin expanded 110 basis points.
· Unit costs declined 2.1%; on an adjusted basis down 3.2%, contributing to the third consecutive quarter of positive operating leverage.
The International segment delivered higher profit and expanded operating margin, adapting well to the dynamic macro environment. Strong execution, cost management and a strategic focus on market and e-commerce opportunities enabled the solid performance for the quarter.
$ 809 M
· Export volume was down slightly as gains on intra-Europe, intra-Asia and U.S. export trade lanes did not fully offset the declines into and out of the U.K. and on the Asia-U.S. lane.
· Operating profit increased more than 2%, and by 3.6% on an adjusted basis.
· Industry-leading operating margin remained strong at 21.2%; adjusted operating margin expanded 110 basis points.
Supply Chain and Freight Segment
Supply Chain and Freight produced strong profit growth in the quarter. The segment also expanded operating margins driven by disciplined cost management actions and continued focus on growing its SMB customer base.
$ 262 M
· Operating profit increased more than 16%, and by 17% on an adjusted basis.
· Logistics, Marken and UPS Freight delivered revenue growth.
· Logistics and Marken grew profits by double digits, which helped offset softer conditions in Forwarding and truckload brokerage.
· UPS Freight produced an increase in revenue per LTL (less-than-truckload) hundredweight of 2.5%, driven by its focus on SMBs.
Full-year 2019 Consolidated Results
· UPS’s transformation investments generated higher total revenue, operating profit growth and margin expansion in all segments.
· Full-year 2019 diluted EPS totaled $5.11; adjusted diluted EPS was $7.53, excluding the impacts of the MTM pension charge, transformation charges and legal contingencies.
· Total revenue increased to $74 billion, driven by strong volume growth in the U.S.
· Capital expenditures were $6.4 billion, and on an adjusted basis $6.5 billion, to support network enhancements.
· Annual adjusted free cash flow exceeded $4.1 billion.
· Dividends paid were $3.3 billion, a per-share increase of 5.5% over the prior year.
· The company repurchased more than 9 million shares for approximately $1 billion.