01—Abstract
Summary
Summary of the 10-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.
United Parcel Service, Inc. (UPS) reported a decrease in revenue and net income for the fiscal year ended December 31, 2023, primarily driven by macroeconomic headwinds, inflationary pressures, and volume diversion related to labor negotiations.
Total revenue declined by 9.3% to $91.0 billiona, and net income fell by 41.9% to $6.7 billion. The company faced challenges in its U.S. Domestic and International Package segments due to softening demand and geopolitical tensions.
Despite these headwinds, UPS successfully ratified a new national master agreement with the Teamsters, which management expects will lead to improved volume and customer retention in the latter half of 2024. The company is also focused on strategic growth areas, including healthcare and Asia trade lanes, and has made strategic acquisitions to bolster its Supply Chain Solutions segment.
02—Key points
Key Highlights
- Revenue decreased by 9.3% to $91.0 billion in 2023 compared to $100.3 billion in 2022.
- Net income decreased by 41.9% to $6.7 billion in 2023, down from $11.5 billion in 2022.
- Diluted earnings per share (EPS) decreased to $7.80 in 2023 from $13.20 in 2022.
- U.S. Domestic Package revenue declined by 6.6%, and International Package revenue decreased by 9.5% due to macroeconomic factors and labor negotiations.
- Supply Chain Solutions revenue saw a significant decrease of 19.9%, primarily in the forwarding business, though logistics revenue grew.
- The company ratified a new national master agreement with the Teamsters in Q3 2023, which includes wage and benefit rate increases.
- Capital expenditures were $5.2 billion in 2023, with plans to invest approximately $4.5 billion in 2024, focusing on network enhancements and technology.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 20, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $90.96B$100.34B | −9.3% |
| Operating Expenses | $81.82B$87.24B | −6.2% |
| Operating Income | $9.14B$13.09B | −30.2% |
| Interest Expense | $785.00M$704.00M | +11.5% |
| Net Income | $6.71B$11.55B | −41.9% |
| EPS (Basic) | $7.81$13.26 | −41.1% |
| EPS (Diluted) | $7.80$13.20 | −40.9% |
| Shares Outstanding (Basic) | 859.00M871.00M | −1.4% |
| Shares Outstanding (Diluted) | 860.00M875.00M | −1.7% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the revenue decrease in 2023?
The decrease in revenue was primarily attributed to macroeconomic headwinds, including inflationary pressures and changes in consumer behavior. Additionally, volume diversion related to labor negotiations with the Teamsters, and reductions in fuel and demand-related surcharges also contributed to the decline.
How did the new Teamsters contract impact UPS's financial results?
The ratification of the new national master agreement with the Teamsters in the third quarter of 2023 led to higher year-over-year labor costs, particularly in the second half of the year. These increased costs are expected to persist through the first half of 2024. While the contract impacted costs, UPS reported regaining approximately 60% of diverted U.S. volume after ratification.
What is UPS's outlook for revenue and volume in 2024?
UPS anticipates that global economic conditions will improve gradually during 2024, leading to increased volume and revenue growth in the second half of the year. Specifically for the U.S. Domestic Package segment, management expects volume growth rates to be flat in the first half of 2024, with moderate growth expected in the second half. For the International Package segment, volume growth is also expected to be flat in the first half of 2024 and improve in the second half, dependent on global macroeconomic conditions.
Did UPS make any significant acquisitions in 2023?
Yes, in 2023, UPS acquired MNX Global Logistics, a provider of time-critical and temperature-sensitive logistics, and Happy Returns, a technology-focused company for end-to-end return services. Both acquisitions are reported within the Supply Chain Solutions segment.
06—Continue