10-QPeriod: Q1 FY2015

UNITED PARCEL SERVICE INC Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 7, 2015For Securities:UPS

Summary

United Parcel Service Inc. (UPS) reported solid results for the first quarter of 2015, demonstrating resilience in a challenging global economic environment. Revenue saw a modest increase of 1.4% year-over-year, reaching $13.98 billion, driven primarily by growth in its U.S. Domestic Package segment. Operating profit significantly improved by 10.6% to $1.67 billion, reflecting successful cost management initiatives and operational efficiencies, including the continued deployment of technology like the ORION system. Despite headwinds such as a strengthening U.S. dollar impacting export growth and disruptions from port slowdowns and adverse weather, UPS managed to grow its overall package volume by 2.8%. The company's strategic focus on improving yield management and operational efficiency is evident in the expanded operating margin to 12.0% from 11.0% in the prior year. Diluted Earnings Per Share (EPS) also saw a healthy increase of 14.3% to $1.12. The company continued its commitment to returning capital to shareholders through robust share repurchase programs and an increased dividend. Overall, UPS showcased strong operational execution and financial discipline in the first quarter of 2015.

Financial Highlights

52 data points
Beta

Revenue

$13.98B

Net Income

$1.03B

7.3% Net Margin

EPS (Diluted)

$1.12

Total Assets

$37.33B

Cash & Equivalents

$4.48B

Free Cash Flow

$2.39B

Financial Statements
Beta
Revenue$13.98B
Operating Expenses$12.30B
Operating Income$1.67B
Interest Expense$87.00M
Net Income$1.03B
EPS (Basic)$1.13
EPS (Diluted)$1.12
Shares Outstanding (Basic)906.00M
Shares Outstanding (Diluted)913.00M

Key Highlights

  • 1Revenue increased by 1.4% to $13.98 billion for the first quarter of 2015 compared to the prior year.
  • 2Operating profit grew significantly by 10.6% to $1.67 billion, leading to an improved operating margin of 12.0% (up from 11.0%).
  • 3Diluted Earnings Per Share (EPS) rose by 14.3% to $1.12.
  • 4Total average daily package volume increased by 2.8% to 17.47 million.
  • 5The U.S. Domestic Package segment showed strong performance with revenue up 3.8% and operating profit up 10.5%.
  • 6Cash flow from operations increased substantially by $484 million to $2.75 billion, reflecting higher net income and improved working capital management.
  • 7The company returned $1.31 billion to shareholders through dividends ($636 million) and share repurchases ($676 million) in the quarter.

Frequently Asked Questions

UPS reported a solid first quarter in 2015 with a 1.4% increase in revenue to $13.98 billion and a significant 10.6% rise in operating profit to $1.67 billion. This led to an improved operating margin and a 14.3% increase in diluted EPS to $1.12. The company also saw a 2.8% increase in average daily package volume.

The U.S. Domestic Package segment was a key driver of growth, with revenue up 3.8% and operating profit up 10.5%. The International Package segment saw a 5.0% decrease in revenue, partly due to currency headwinds, but reported a 13.7% increase in operating profit. The Supply Chain & Freight segment experienced a modest 1.3% revenue increase and a 2.0% rise in operating profit.

Operating expenses increased by a modest 0.3% despite revenue growth. Key cost drivers included higher compensation and benefits expenses, partly due to increased pension and healthcare costs, and higher worker's compensation expenses. However, significant decreases in fuel expenses (down 33.7%) and purchased transportation costs helped to mitigate overall expense growth.

UPS generated strong operating cash flow of $2.75 billion in the quarter. The company continued its commitment to shareholder returns by paying $636 million in dividends and repurchasing $676 million of its common stock. UPS anticipates approximately $2.7 billion in share repurchases for the full year 2015.