10-KPeriod: FY2013

UNITED PARCEL SERVICE INC Annual Report, Year Ended Dec 31, 2013

Filed February 28, 2014For Securities:UPS

Summary

United Parcel Service (UPS) reported significant revenue growth and profitability improvements in its 2013 annual report, driven by a strong performance in its U.S. Domestic Package segment, largely fueled by the ongoing expansion of e-commerce and a robust holiday season. The company demonstrated resilience in its International Package and Supply Chain & Freight segments despite challenging global economic conditions, particularly in Europe. UPS's strategic investments in technology and network infrastructure continue to enhance operational efficiency and service offerings. The company also made progress in labor negotiations, reaching tentative agreements with the Teamsters, which should provide greater stability. While facing competitive pressures and fluctuating fuel costs, UPS's financial strength, integrated global network, and leading technology position it well for continued growth and value creation for shareholders.

Financial Highlights

53 data points
Beta

Revenue

$55.44B

Net Income

$4.37B

7.9% Net Margin

EPS (Diluted)

$4.61

Total Assets

$35.55B

Cash & Equivalents

$4.67B

Free Cash Flow

$5.24B

Financial Statements
Beta
Revenue$55.44B
Operating Expenses$48.40B
Operating Income$7.03B
Interest Expense$380.00M
Net Income$4.37B
EPS (Basic)$4.65
EPS (Diluted)$4.61
Shares Outstanding (Basic)940.00M
Shares Outstanding (Diluted)948.00M

Key Highlights

  • 1Total revenue reached $55.4 billion in 2013, a 2.4% increase from 2012, indicating continued top-line growth.
  • 2Operating profit saw a substantial increase to $7.03 billion in 2013, up from $1.34 billion in 2012, demonstrating significant operational leverage and recovery from one-time charges in the prior year.
  • 3The U.S. Domestic Package segment was a primary driver of growth, with average daily volume up 3.7% and operating profit significantly improving to $4.6 billion from $459 million in 2012.
  • 4International Package segment revenue grew 2.5%, with export volume increasing, although profitability was impacted by economic pressures and a shift towards standard delivery products.
  • 5The company maintained a strong balance sheet with $5.245 billion in cash and marketable securities and $6.488 billion in shareowner's equity as of December 31, 2013.
  • 6UPS continues to invest heavily in technology, including the rollout of telematics in over 80,000 vehicles and the implementation of the ORION routing system, to drive operational efficiency and customer service improvements.
  • 7Shareholder returns were strong, with a share repurchase authorization of $10.0 billion and a dividend increase of 8% announced for the next quarter, reflecting confidence in future cash generation.

Frequently Asked Questions

Revenue growth was primarily driven by the U.S. Domestic Package segment, benefiting from increased e-commerce activity and strong retail sales, especially during the holiday season. Business-to-consumer shipments grew significantly, representing over 40% of total U.S. Domestic Package volume and exceeding 50% during the fourth quarter for the first time.

The termination of the TNT Express acquisition resulted in a pre-tax charge of $284 million related to a termination fee and transaction expenses. This charge impacted the International Package segment's operating expenses. However, this was partially offset by a $245 million pre-tax foreign currency gain recognized from the liquidation of a subsidiary related to the acquisition, also impacting the International Package segment.

As of December 31, 2013, UPS maintained a strong financial position with $5.245 billion in cash and marketable securities and $6.488 billion in shareowner's equity. The company anticipates capital expenditures of approximately $2.5 billion for 2014. Additionally, UPS announced a $10.0 billion share repurchase authorization with approximately $6.814 billion remaining and a planned $2.7 billion in share repurchases for 2014, alongside an 8% increase in its quarterly dividend, indicating confidence in its cash generation capabilities and commitment to shareholder returns.

UPS is investing in technology to enhance operational efficiency and customer experience. Key initiatives include the rollout of telematics to its fleet (over 80,000 vehicles by the end of 2013) to improve performance and safety, and the implementation of the On Road Integrated Optimization and Navigation (ORION) system to optimize delivery routes. The company also continues to enhance its customer-facing technology platforms like UPS Quantum View and UPS My Choice.