10-QPeriod: Q3 FY2019

UNITED PARCEL SERVICE INC Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 29, 2019For Securities:UPS

Summary

United Parcel Service Inc. (UPS) reported strong third quarter 2019 results, driven by robust growth in its U.S. Domestic Package segment. Consolidated revenue increased by 5.0% year-over-year, reaching $18.3 billion, while net income rose by 16.0% to $1.75 billion, translating to diluted earnings per share of $2.01, a 16.2% increase. This performance reflects effective cost management and strategic investments, particularly in faster delivery options within the U.S. domestic market. The company continues to invest in its transformation strategy, which is beginning to show benefits in operating efficiencies and cost per piece. While international and supply chain segments experienced mixed results, the overall financial health of UPS remains strong, supported by healthy operating profit and cash flow generation. Investors can look to the ongoing expansion of premium services and operational improvements as key drivers for future growth.

Financial Highlights

54 data points
Beta

Revenue

$18.32B

Net Income

$1.75B

9.6% Net Margin

EPS (Diluted)

$2.01

Total Assets

$53.28B

Cash & Equivalents

$4.18B

Free Cash Flow

$11.00M

Financial Statements
Beta
Revenue$18.32B
Operating Expenses$16.19B
Operating Income$2.13B
Interest Expense$159.00M
Net Income$1.75B
EPS (Basic)$2.03
EPS (Diluted)$2.01
Shares Outstanding (Basic)864.00M
Shares Outstanding (Diluted)870.00M

Key Highlights

  • 1Consolidated revenue increased 5.0% to $18.3 billion in Q3 2019 compared to Q3 2018.
  • 2Net income grew 16.0% to $1.75 billion in Q3 2019, with diluted EPS up 16.2% to $2.01.
  • 3U.S. Domestic Package segment saw significant revenue growth (9.8%) and operating profit improvement (28.1%), driven by volume increases in air products.
  • 4Operating expenses increased by 3.0% in Q3 2019, but operating margins improved significantly, indicating better cost control relative to revenue growth.
  • 5The adoption of the new lease accounting standard (ASC 842) resulted in the recognition of significant operating lease right-of-use assets and liabilities on the balance sheet.
  • 6The company repurchased approximately $0.75 billion of its common stock during the first nine months of 2019 and increased its quarterly dividend.
  • 7Transformation strategy costs totaled $63 million in Q3 2019, contributing to efficiency improvements that are beginning to lower cost per piece.

Frequently Asked Questions

Consolidated revenue increased by 5.0% to $18.3 billion in the third quarter of 2019 compared to the same period in 2018. This growth was primarily driven by the U.S. Domestic Package segment.

UPS reported a net income of $1.75 billion for the third quarter of 2019, a 16.0% increase year-over-year. Diluted earnings per share also saw a significant increase of 16.2% to $2.01.

The U.S. Domestic Package segment showed strong performance with a 9.8% revenue increase and a 28.1% rise in operating profit. The International Package segment saw a modest 0.5% revenue increase, while the Supply Chain & Freight segment experienced a 4.5% revenue decrease.

Effective January 1, 2019, UPS adopted ASC 842, which requires the recognition of operating lease right-of-use assets ($2.5 billion) and lease liabilities ($2.6 billion) on the balance sheet, impacting financial reporting but not necessarily cash flows.