July 24, 2012
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, October 23, 2007
Results Driven by Supply Chain & Freight, International
UPS (NYSE:UPS) today reported a 9.4% increase in adjusted diluted earnings per share for its third quarter on a 4.7% gain in revenue. The company saw significant improvement in the supply chain and freight segment and good gains in its international business. Its U.S. small package operation posted modest improvement in spite of a sluggish economy.
For the three months ended Sept. 30, 2007, adjusted diluted earnings per share climbed to $1.05 as consolidated package volume rose to an average daily total of 15.25 million.
The adjusted financial results exclude a $46 million restructuring charge and related expenses for a supply chain business in France. Including the impact of this charge, diluted earnings per share increased 6.3% to $1.02 compared to $0.96 per diluted share in the same period in 2006.
"This was a very good quarter for the company from many perspectives," said Mike Eskew, UPS's chairman and CEO. "First, UPS turned in a solid performance in the face of a slower U.S. economy. We reached tentative agreement with the Teamsters on a new contract almost a year early. And we unveiled industry-leading service and technology innovations."
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3Q 2007
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| Consolidated Results |
3Q 2007
|
Adjusted
|
3Q 2006
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| Revenue |
$12.21 B
|
$11.66 B
|
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| Operating profit |
$1.71 B
|
$1.75 B
|
$1.58 B
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| Operating margin |
14.0%
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14.4%
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13.5%
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| Average volume per day |
15.25 M
|
15.07 M
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| Diluted earnings per share |
$1.02
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$1.05
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$0.96
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Adjusted operating profit improved 11.3% with gains in all three business segments. Consolidated revenue per piece increased 3.1%.
Cash Position
For the first nine months of 2007, UPS:
| U.S. Domestic Package |
3Q 2007
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3Q 2006
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| Revenue |
$7.55 B
|
$7.40 B
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| Operating profit |
$1.23 B
|
$1.21 B
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| Operating margin |
16.3%
|
16.3%
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| Average volume per day |
13.4 M
|
13.3 M
|
Total domestic volume increased nearly 1%. Revenue per piece was firm, with ground package revenue per piece rising 2.4%.
During the quarter, UPS and the Teamsters reached a handshake agreement on a new five-year contract covering about 240,000 U.S. employees. The tentative deal, which is going through the ratification process, will extend UPS's contract with the Teamsters through July 31, 2013. The company views the agreement as good for UPS employees, customers and shareowners alike.
| International Package |
3Q 2007
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3Q 2006
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| Revenue |
$2.53 B
|
$2.25 B
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| Operating profit |
$428 M
|
$387 M
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| Operating margin |
16.9%
|
17.2%
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| Average volume per day |
1.84 M
|
1.77 M
|
Export volume increased 9.3%. Double-digit gains in both Europe and Asia were offset somewhat by mid single-digit growth in U.S. export volume. Operating profit improved 10.6% to $428 million.
During the quarter, UPS won authority to operate six daily flights between the United States and Nagoya, Japan. These flights will connect with the company's new hub in Shanghai, on which construction began in August. As the quarter ended, UPS unveiled two new "firsts" in the package industry: paperless invoice international shipping and package return capability to 98 countries and territories. The new services will be known as UPS Paperlesssm Invoice and international UPS Returns¿.
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3Q 2007
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| Supply Chain and Freight |
3Q 2007
|
Adjusted
|
3Q 2006
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| Revenue |
$2.13 B
|
$2.01 B
|
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| Operating profit |
$52 M
|
$98 M
|
($19) M
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| Operating margin |
2.4%
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4.6%
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(.9)%
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The supply chain and freight segment continued the momentum established earlier in the year. Adjusted operating profit improved $117 million. Forwarding and logistics revenue rose 4.7% to $1.49 billion. Less-than-truckload revenue increased 12.1% to $521 million with 13.3% shipment growth.
Outlook
"Once again, UPS's balanced network around the globe produced solid results even in the face of a lackluster U.S. economy," said Scott Davis, UPS's vice chairman and CFO. "Fourth quarter results will be driven by good performance in our international operations and further gains in supply chain and freight. We expect slowing retail sales will restrain U.S. domestic volume growth. For the full year, we expect adjusted diluted earnings per share to be between $4.13 and $4.19, well within the range we provided at the beginning of 2007."
View the full financial tables
EDITOR'S NOTE: UPS Chairman and CEO Mike Eskew and Vice Chairman and CFO Scott Davis will discuss third quarter results with investors and analysts during a conference call today at 8:30 a.m. EDT. That conference call is open to listeners through a live Webcast. To access the call, go to www.shareholder.com/UPS and click on "Earnings Webcast.".
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