UPS
$118.24
United Parcel Service
($.85)
(.71%)
Earnings Details
2nd Quarter June 2018
Wednesday, July 25, 2018 7:00:00 AM
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Summary

United Parcel Service Reports In-line

United Parcel Service (UPS) reported 2nd Quarter June 2018 earnings of $1.94 per share on revenue of $17.5 billion. The consensus earnings estimate was $1.92 per share on revenue of $17.2 billion. The Earnings Whisper number was $1.94 per share. Revenue grew 10.8% on a year-over-year basis.

The company said it continues to expect 2018 earnings of $7.03 to $7.37 per share. The current consensus earnings estimate is $7.24 per share for the year ending December 31, 2018.

United Parcel Service Inc (UPS) is a package delivery organization less-than-truckload industry & provider of supply chain management solutions. It operates in three segments; U.S. Domestic Package, International Package and Supply Chain & Freight.

Results
Reported Earnings
$1.94
Earnings Whisper
$1.94
Consensus Estimate
$1.92
Reported Revenue
$17.46 Bil
Revenue Estimate
$17.23 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

  • 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 Results2Q 2018Adjusted
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 2018Adjusted
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 2018Adjusted
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 2018Adjusted
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 andLeases & Charters   
DescriptionCapital Leasesfrom OthersOn OrderUnder Option 
Operating:     
Boeing 757-20075--- 
Boeing 767-200-2-  
Boeing 767-30059-9- 
Boeing 767-300BCF3--- 
Airbus A300-60052--- 
Boeing MD-11375-- 
Boeing 747-400F11--- 
Boeing 747-400BCF2--- 
Boeing 747-8F6-22- 
Other-315-- 
      
Total24532231- 
      


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

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Source: UPS