10-QPeriod: Q1 FY2011

UNITED PARCEL SERVICE INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 5, 2011For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) reported strong revenue growth in the first quarter of 2011, with a 7.3% increase year-over-year, driven by improvements in the global economy and its "yield management" initiatives. Net income saw a significant surge of 66.0%, reaching $885 million, with diluted EPS at $0.88. The company's U.S. Domestic Package and International Package segments were key performers, benefiting from increased volume and a focus on higher-yielding customer segments and revenue management. Despite rising fuel costs, which impacted operating expenses, UPS demonstrated operational efficiency and cost containment, leading to a notable increase in operating profit and margin. The company's financial position remains solid, with a substantial increase in cash and cash equivalents to $4.66 billion. UPS also continued its commitment to shareholder returns through significant share repurchases totaling $505 million and an increased quarterly dividend. While facing ongoing legal proceedings and investigations, particularly related to pricing practices, UPS believes these matters will not have a material adverse effect on its financial condition.

Financial Highlights

51 data points
Beta

Revenue

$12.58B

Net Income

$915.00M

7.3% Net Margin

EPS (Diluted)

$0.91

Total Assets

$34.59B

Cash & Equivalents

$4.66B

Free Cash Flow

$879.00M

Financial Statements
Beta
Revenue$12.58B
Operating Expenses$11.11B
Operating Income$1.47B
Interest Expense$85.00M
Net Income$915.00M
EPS (Basic)$0.92
EPS (Diluted)$0.91
Shares Outstanding (Basic)992.00M
Shares Outstanding (Diluted)1.00B

Key Highlights

  • 1Revenue increased by 7.3% to $12.58 billion compared to the prior year's quarter, indicating a strong recovery and growth momentum.
  • 2Net income more than doubled, increasing by 66.0% to $885 million, demonstrating improved profitability.
  • 3Diluted Earnings Per Share (EPS) rose significantly by 66.0% to $0.88, reflecting enhanced shareholder value.
  • 4Operating Profit saw a substantial increase of 36.9% to $1.43 billion, highlighting operational efficiency and effective cost management.
  • 5U.S. Domestic Package segment revenue grew by 6.2% and International Package segment revenue by 9.9%, driven by volume increases and strategic pricing.
  • 6Share repurchases totaled $505 million, and the company increased its quarterly dividend to $0.52 per share, signaling confidence and commitment to returning capital to shareholders.
  • 7Cash and cash equivalents increased by over $1.2 billion to $4.66 billion, bolstering the company's liquidity position.

Frequently Asked Questions

Revenue growth was primarily driven by the continued improvement in the global economic situation, leading to increased package volumes in both U.S. Domestic and International segments. UPS also benefited from its initiatives to improve yield management, increase operational efficiency, and contain costs.

Rising fuel costs increased operating expenses, particularly fuel and purchased transportation costs. However, UPS managed this impact through higher fuel surcharge rates collected from customers and by implementing fuel efficiency measures, which helped mitigate the overall effect on profitability.

UPS is involved in several ongoing legal proceedings and investigations, primarily related to wage-and-hour laws, antitrust allegations, and pricing practices in the freight forwarding industry. The company denies liability and intends to defend itself vigorously, stating that at this time, it cannot determine the amount of any liability or whether it would have a material adverse effect on its financial condition.

UPS continues to prioritize shareholder returns. In the first quarter of 2011, the company repurchased $505 million of its stock and increased its quarterly cash dividend by 10.6% to $0.52 per share, signaling confidence in its future performance and financial strength.