10-QPeriod: Q2 FY2016

UNITED PARCEL SERVICE INC Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 5, 2016For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) reported solid financial results for the second quarter and first half of 2016, demonstrating resilience in a mixed economic environment. Revenue saw a notable increase, driven by moderate growth in package volume, particularly in the U.S. Domestic Package segment, which benefited from e-commerce and business-to-consumer trends. The company also showed improvements in operating profit and margins across its segments, aided by operational efficiency initiatives and technology deployments like ORION. While international markets presented some economic uncertainties, UPS's International Package segment also posted revenue growth and improved operating margins. The Supply Chain & Freight segment experienced revenue growth, largely attributable to the acquisition of Coyote Logistics, although operational challenges in freight forwarding and LTL services were noted. The company continues to focus on improving network flexibility, yield management, and cost containment, underscoring a strategic approach to navigate global economic conditions and drive shareholder value.

Financial Highlights

52 data points
Beta

Revenue

$14.63B

Net Income

$1.27B

8.7% Net Margin

EPS (Diluted)

$1.43

Total Assets

$38.34B

Cash & Equivalents

$3.06B

Free Cash Flow

$1.49B

Financial Statements
Beta
Revenue$14.63B
Operating Expenses$12.59B
Operating Income$2.04B
Interest Expense$94.00M
Net Income$1.27B
EPS (Basic)$1.43
EPS (Diluted)$1.43
Shares Outstanding (Basic)886.00M
Shares Outstanding (Diluted)890.00M

Key Highlights

  • 1Revenue increased by 3.8% to $14.63 billion for the three months ended June 30, 2016, compared to the prior year period.
  • 2Operating profit grew by 4.0% to $2.04 billion for the three months ended June 30, 2016.
  • 3Net income attributable to common shareholders increased by 3.2% to $1.27 billion for the three months ended June 30, 2016.
  • 4Diluted Earnings Per Share (EPS) rose to $1.43 from $1.35 in the same period last year.
  • 5The U.S. Domestic Package segment saw a 2.4% increase in total average daily package volume, with a notable 5.6% rise in Next Day Air volume.
  • 6International Package operations reported an 11.1% increase in operating profit to $613 million, with improved operating margins.
  • 7The company repurchased $1.33 billion of common stock in the first six months of 2016, reflecting a commitment to returning capital to shareholders.

Frequently Asked Questions

For the second quarter of 2016, UPS reported a 3.8% increase in revenue to $14.63 billion and a 4.0% increase in operating profit to $2.04 billion. Net income rose by 3.2% to $1.27 billion, leading to a diluted Earnings Per Share of $1.43, up from $1.35 in the prior year's second quarter.

The U.S. Domestic Package segment saw moderate volume growth and improved operating margins. The International Package segment demonstrated strong performance with an 11.1% increase in operating profit and higher margins. The Supply Chain & Freight segment's revenue grew due to the Coyote Logistics acquisition, although operating profit declined slightly year-over-year.

Revenue growth in the U.S. Domestic Package segment was driven by an increase in total average daily package volume, particularly in Next Day Air and Ground services. E-commerce and business-to-consumer trends, along with initiatives like UPS SurePost and the deployment of ORION technology for efficiency, were significant contributors.

UPS is focusing on improving network flexibility and capacity, enhancing yield management, and increasing operational efficiency and cost containment. The company is leveraging technology, including the ORION system, and adapting its air capacity to match prevailing volume levels in response to global economic conditions and volatile currency markets.