10-QPeriod: Q3 FY2022

UNITED PARCEL SERVICE INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 2, 2022For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) reported a strong third quarter of 2022, with revenue increasing by 4.2% to $24.2 billion and operating profit rising by 7.5% to $3.1 billion year-over-year. This performance was driven by robust revenue per piece growth across its global small package operations, which more than offset a decline in average daily volume. The company also saw an improvement in operating margin to 12.9% from 12.5% in the prior year's third quarter. Despite a challenging macroeconomic environment marked by global inflation, rising interest rates, and geopolitical uncertainties, UPS demonstrated resilience. The company is strategically focusing on enhancing customer engagement through digital capabilities and increasing efficiencies. UPS continues to invest in its "Better and Bolder" approach, aiming for accelerated growth in complex logistics, particularly in the healthcare sector with the planned acquisition of Bomi Group. While net income saw a decline of 17.4% year-over-year to $2.6 billion, this was largely influenced by significant defined benefit plan gains in the prior year, with adjusted diluted earnings per share remaining strong at $2.99.

Financial Highlights

54 data points
Beta

Revenue

$24.16B

Net Income

$2.58B

10.7% Net Margin

EPS (Diluted)

$2.96

Total Assets

$69.54B

Cash & Equivalents

$11.04B

Free Cash Flow

$1.59B

Financial Statements
Beta
Revenue$24.16B
Operating Expenses$21.05B
Operating Income$3.11B
Interest Expense$177.00M
Net Income$2.58B
EPS (Basic)$2.97
EPS (Diluted)$2.96
Shares Outstanding (Basic)870.00M
Shares Outstanding (Diluted)872.00M

Key Highlights

  • 1Revenue increased by 4.2% to $24.2 billion in Q3 2022 compared to Q3 2021.
  • 2Operating profit rose by 7.5% to $3.1 billion in Q3 2022 year-over-year.
  • 3Average daily volume in global small package operations decreased by 2.1% year-over-year.
  • 4Revenue per piece increased by 8.6% for the quarter, demonstrating pricing power and revenue quality initiatives.
  • 5Operating margin improved to 12.9% from 12.5% in the prior year's comparable quarter.
  • 6The company is actively returning capital to shareholders, with share repurchases totaling $2.2 billion and dividends paid of $3.8 billion for the first nine months of 2022.
  • 7Planned acquisition of Bomi Group to expand healthcare logistics footprint.

Frequently Asked Questions

Revenue growth is primarily driven by an increase in revenue per piece. This is achieved through pricing actions, fuel surcharges, and a favorable shift in customer and product mix, indicating that UPS is able to command higher prices for its services.

UPS faces several challenges, including global inflation, rising interest rates, volatile energy prices, geopolitical uncertainties, and foreign currency exchange rate fluctuations. Additionally, labor market pressures and past COVID-19 related lockdowns in Asia have impacted demand and operating costs.

UPS is managing operating expenses through a combination of strategies. While facing increased costs from higher fuel prices and compensation/benefits, the company is also implementing productivity initiatives and leveraging its 'Better and Bolder' strategic framework to drive efficiencies and optimize its network.

UPS is focusing on accelerating growth in complex logistics, notably through its planned acquisition of Bomi Group to expand its healthcare logistics capabilities, particularly in cold chain logistics. The company is also enhancing customer engagement via digital solutions and deploying automated technology for productivity improvements.