10-QPeriod: Q3 FY2015

UNITED PARCEL SERVICE INC Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 5, 2015For Securities:UPS

Summary

United Parcel Service Inc. (UPS) reported its third-quarter and year-to-date results for 2015, demonstrating resilience in a mixed global economic environment. Revenue remained largely flat year-over-year for both the three and nine-month periods. However, operating profit saw a notable increase of 1.5% for the quarter and a significant 33.3% for the nine-month period, driven by cost containment initiatives and improved operational efficiency across segments. Net income also showed positive growth, up 3.5% for the quarter and 36.2% year-to-date, leading to higher earnings per share. The company made strategic acquisitions, including Coyote Logistics, to expand its service offerings and strengthen its Supply Chain & Freight segment. Despite challenges like a strengthening U.S. dollar impacting international trade and fluctuating fuel prices, UPS's focus on technology deployment, yield management, and operational efficiency has positioned it for continued performance.

Financial Highlights

52 data points
Beta

Revenue

$14.24B

Net Income

$1.26B

8.8% Net Margin

EPS (Diluted)

$1.39

Total Assets

$39.00B

Cash & Equivalents

$3.44B

Free Cash Flow

$1.49B

Financial Statements
Beta
Revenue$14.24B
Operating Expenses$12.25B
Operating Income$1.98B
Interest Expense$83.00M
Net Income$1.26B
EPS (Basic)$1.40
EPS (Diluted)$1.39
Shares Outstanding (Basic)895.00M
Shares Outstanding (Diluted)903.00M

Key Highlights

  • 1Revenue remained stable year-over-year for both the three and nine months ended September 30, 2015.
  • 2Operating profit saw a significant increase, up 1.5% for the quarter and 33.3% year-to-date, indicating effective cost management and operational improvements.
  • 3Net income grew by 3.5% for the quarter and 36.2% year-to-date, resulting in a corresponding increase in both basic and diluted earnings per share.
  • 4The company completed the acquisition of Coyote Logistics in August 2015, strengthening its Supply Chain & Freight segment and adding truckload freight brokerage capabilities.
  • 5Total operating expenses decreased by 0.7% for the quarter and 3.8% for the nine-month period, partly due to lower fuel costs and efficiency gains.
  • 6U.S. Domestic Package segment showed stable revenue with a slight decrease in operating profit for the quarter, but a substantial increase year-to-date due to prior year health and welfare plan charges.
  • 7International Package segment experienced a revenue decline of 7.0% for the quarter and 6.1% year-to-date, largely impacted by currency fluctuations and a shift in trade patterns.

Frequently Asked Questions

UPS's total revenue remained relatively flat, showing a slight decrease of 0.4% for the three months ended September 30, 2015, compared to the same period in 2014. Year-to-date revenue also saw a minor decrease of 0.1%.

The significant increase in operating profit for the nine months ended September 30, 2015 (33.3% increase) was largely due to a substantial one-time charge of $1.066 billion related to health and welfare plan changes incurred in the second quarter of 2014. Excluding this item, the adjusted operating profit showed a more modest but still positive increase.

Yes, in August 2015, UPS acquired Coyote Logistics Midco, Inc., a U.S.-based truckload freight brokerage company, for $1.853 billion. This acquisition is expected to enhance its Supply Chain & Freight segment.

The strengthening U.S. Dollar had a negative impact on UPS's international operations. For the International Package segment, currency movements negatively impacted revenue by $237 million and operating profit by $11 million in the third quarter of 2015 compared to the prior year. For the Supply Chain & Freight segment, currency had a net benefit on operating profit of $7 million in the third quarter.