10-QPeriod: Q2 FY2021

UNITED PARCEL SERVICE INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 6, 2021For Securities:UPS

Summary

United Parcel Service Inc. (UPS) reported strong financial performance for the second quarter and first half of 2021, reflecting a robust recovery and strategic execution. Revenue saw significant year-over-year growth across all segments, driven by double-digit revenue per piece increases in U.S. Domestic and International Package operations. This growth was supported by effective revenue quality initiatives, base rate adjustments, and favorable shifts in customer and product mix, including strong Small and Medium-sized Business (SMB) volume. While consolidated package volume was relatively flat year-over-year due to comparisons against COVID-19 elevated levels in the prior year, the mix shifted favorably from business-to-consumer towards business-to-business, contributing to margin expansion. Operating profit and margins improved significantly across all segments. Key non-recurring items impacting the results included a gain from the divestiture of UPS Freight and a significant mark-to-market gain on defined benefit pension plans, which collectively boosted net income and earnings per share. The company also continues to focus on its transformation strategy, investing in network enhancements and technology.

Financial Highlights

54 data points
Beta

Revenue

$23.42B

Net Income

$2.68B

11.4% Net Margin

EPS (Diluted)

$3.05

Total Assets

$64.87B

Cash & Equivalents

$9.61B

Free Cash Flow

$3.09B

Financial Statements
Beta
Revenue$23.42B
Operating Expenses$20.17B
Operating Income$3.26B
Interest Expense$167.00M
Net Income$2.68B
EPS (Basic)$3.06
EPS (Diluted)$3.05
Shares Outstanding (Basic)875.00M
Shares Outstanding (Diluted)878.00M

Key Highlights

  • 1Revenue increased by 14.5% to $23.4 billion for the quarter and 20.4% to $46.3 billion year-to-date, driven by strong revenue per piece growth across all segments.
  • 2Operating profit surged by 47.3% to $3.3 billion for the quarter and 83.4% to $6.0 billion year-to-date, reflecting improved operational efficiency and revenue quality initiatives.
  • 3Net income rose significantly by 51.4% to $2.7 billion for the quarter and 173.3% to $7.5 billion year-to-date, boosted by operational performance and a large pension mark-to-market gain.
  • 4Diluted Earnings Per Share (EPS) increased by 50.2% to $3.05 for the quarter and 171.0% to $8.51 year-to-date.
  • 5The divestiture of UPS Freight was completed on April 30, 2021, resulting in a pre-tax gain of $101 million for the quarter.
  • 6A significant pre-tax mark-to-market gain of $3.3 billion was recognized in the first quarter related to defined benefit pension plans, largely due to the American Rescue Plan Act.
  • 7U.S. Domestic Package segment saw a 10.2% revenue increase driven by higher revenue per piece and a favorable shift to business-to-business volume, despite a slight decrease in overall package volume.

Frequently Asked Questions

Revenue growth was primarily driven by strong increases in revenue per piece across all segments, particularly in U.S. Domestic Package and International Package operations. This was supported by revenue quality initiatives, base rate increases, favorable shifts in customer and product mix, and higher fuel surcharges.

The divestiture of UPS Freight was completed on April 30, 2021, resulting in a pre-tax gain of $101 million ($77 million after tax) for the second quarter. Proceeds from the sale were used to reduce outstanding debt. The divestiture also triggered a remeasurement of certain pension and postretirement benefit plans.

The substantial increase in net income and EPS year-to-date was significantly influenced by two main factors: a large pre-tax mark-to-market gain of $3.3 billion recognized in the first quarter from defined benefit pension plans, largely due to the American Rescue Plan Act, and strong operational performance leading to higher revenues and profits across all segments.

The shift from B2C to B2B volume is generally favorable. While overall package volume was relatively flat year-over-year due to elevated B2C volumes in the prior year, the increase in B2B activity, which is often more profitable, contributed to margin expansion and revenue quality improvements in segments like U.S. Domestic Package.