UPS 2nd Quarter Earnings Climb over 18% as Package Business Grows Worldwide; Company Raises Full-Year Earnings Expectations.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- UPS (NYSE NYSE See: New York Stock Exchange :UPS) today reported an 18.2% gain in net income for the second quarter on a 7.8% increase in revenue with strong growth in its global small package business. In addition, the company raised its future guidance and expects full year 2004 earnings growth to approach 20%. Previously, the company's guidance called for 2004 earnings at the upper end of a 12-to-18% range. In the second quarter, total average daily package volume worldwide rose to 13.6 million, a net gain of 550,000 packages per day compared to the prior-year period. Average daily ground volume within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. climbed almost 5%. International export volume increased 13% with double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in all regions of the world, led by China with a gain of almost 70%. "Our global small package business is vibrant and growing," said Scott Davis Scott Davis is the name of various people:
For the three months ended June June: see month. 30, consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue totaled $8.87 billion, up 7.8% from the $8.23 billion reported during the prior-year period. Consolidated operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. jumped 21.3% to $1.31 billion. Net income totaled $818 million. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share were $0.72, up 18% from the $0.61 reported for the second quarter of 2003. Operating profit and net income for the period a year ago were impacted by a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss from the sale of the company's Mail Technologies unit, which was more than offset by a related tax benefit. Adjusting for that prior year reduction in operating profit of $24 million and net income benefit of $14 million, operating profit for the current period rose 18.7% and net income rose 20.6%. Earnings per diluted share rose 20% from the adjusted $0.60 per share reported last year. For the six months ended June 30, consolidated revenues totaled $17.79 billion, an increase of 9.5% compared to the prior-year period. Operating profit totaled $2.53 billion, a gain of 24.8% compared to the period in 2003. Net income increased 21% to $1.58 billion over the earlier period. In addition to the impact of the sale of Mail Technologies, the company's results for the first six months of 2003 were affected by a first quarter write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. in marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , and a reduction to income tax expense resulting from the resolution of various tax matters with the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. . Adjusting for the impact of these items, operating profit for the first six months of 2004 rose 23.3% and net income improved by 24.1%. Second quarter highlights by company segments included: --International package revenues climbed almost 18% to $1.61 billion as average daily package volume rose 8.5%. Asia export volume increased 17% and U.S. export volume grew an industry-leading 12%. Operating profit soared 72% to $272 million. This unit now contributes more than 20% of UPS's total operating profit. --U.S. package revenue rose 5.8% to $6.48 billion. Operating profit climbed 7.2% to $892 million and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved 20 basis points to 13.8%, the highest in two years. Average daily ground volume in the U.S. showed a strong 4.9% gain, contributing to a total domestic volume increase of 3.8%. Next Day Air(R) package volume saw robust growth that actually exceeded the growth rate of ground volume, offsetting the decline in air letter volume stemming stemming - stemmer from the unusually high mortgage refinancing Refinancing An extension and/or increase in amount of existing debt. activity last year. Average revenue per piece rose for all products, with the overall U.S. average revenue per piece increasing 2%. --Revenue for the non-package segment grew 6.4% to $778 million, while operating profit climbed 62%. Excluding the loss from the 2003 sale of the Mail Technologies business, operating profit increased 28.1%. Revenue for UPS Supply Chain Solutions, the largest unit in the non-package segment, increased 7.2% to $568 million. Several developments during the second quarter positioned the company well for future growth. The United States and China agreed to significantly expand aviation rights; unique customer services were developed or enhanced with eBay (eBay, Inc., San Jose, CA, www.ebay.com) The major auction service on the Web. eBay popularized the concept of buying and selling online, and both individuals and commercial enterprises list items for sale. , Yahoo! Small Business and Toshiba Toshiba Corporation (株式会社東芝 Kabushiki-gaisha Tōshiba , and UPS Supply Chain Solutions launched a service to help businesses recycle re·cy·cle tr.v. re·cy·cled, re·cy·cling, re·cy·cles 1. To put or pass through a cycle again, as for further treatment. 2. To start a different cycle in. 3. a. or dispose of dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. unwanted electronics. "The breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is of solutions we bring to our customers is a unique competitive advantage," Davis said. "It is allowing us to deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. our relationships with customers, which is producing bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. benefits to all three segments of our business." Davis said the company projects third quarter earnings to increase over last year to the range of $0.69 to $0.72 per diluted share and expects full year 2004 earnings growth approaching 20%, compared with last year's adjusted earnings per share of $2.44. UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing synchronizing, n a technique that a therapist uses to coordinate his or her breath with that of the client; builds trust and establishes relationship. the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (UPS) and the company can be found on the Web at UPS.com. EDITOR'S NOTE Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : UPS CFO See Chief Financial Officer. Scott Davis will discuss second quarter results with investors and analysts during a conference call later today at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York 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." We supplement the reporting of our financial information determined under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, net income and earnings per share. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operations because they exclude items that may not be indicative indicative: see mood. of or are unrelated to our core operating results, and provide a better baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version for analyzing trends in our underlying businesses. Furthermore, we use these adjusted financial measures to determine awards for our management personnel under our incentive compensation plan. In the second quarter of 2003, we recorded a $24 million pre-tax loss and a $38 million tax benefit on the sale of our Mail Technologies business. In the first quarter of 2003, we incurred a $58 million pre-tax impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge related to the Company's investment in S&P 500 equity portfolios and benefited from a $55 million reduction to income tax expense due to the resolution of various tax issues with the Internal Revenue Service. We presented operating profit, net income and earnings per share excluding the impact of these items as we believe these adjusted measures better enable shareowners to focus on period-over-period operating performance. We believe it is useful to present operating profit, net income and earnings per share excluding the impact of the sale of Mail Technologies as this sale has minimal implications on future financial performance. We believe it is useful to present net income and earnings per share excluding the impact of the impairment charge because the Company has been significantly reducing the size of its equity portfolio investments and such investments are not a core business of the Company. We also believe it is useful to present net income and earnings per share excluding the impact of the resolution of the tax issues because the underlying matters that produced the tax benefits were unique and, as resolved, have no bearing on future anticipated tax expense. Because non-GAAP financial measures are not standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. , it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for GAAP operating profit, operating margin, net income and earnings per share, the most directly comparable GAAP financial measures. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our business. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. and not to rely on any single financial measure. Except for historical information contained herein, the statements made in this release constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations, our competitive environment, strikes, work stoppages and slowdowns, increases in aviation and motor fuel prices, cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.
United Parcel Service, Inc.
Selected Financial Data - Second Quarter
Change 2Q
2004 vs.
Quarter Ended June 30, 2Q 2003 (as
---------------------------------- adjusted)
2003 2003 -----------
As 2003 As
2004 Reported Adjustments Adjusted $ %
----------------------------------- ----------
(financial data in millions, except per
share amounts)
Statement of Income
Data:
Revenue:
U.S. domestic
package $6,480 $6,124 $ - $6,124 $356 5.8%
International
package 1,613 1,371 - 1,371 242 17.7%
Non-package 778 731 - 731 47 6.4%
---------------------------------- ----
Total revenue 8,871 8,226 - 8,226 645 7.8%
Operating expenses:
Compensation and
benefits 5,079 4,754 - 4,754 325 6.8%
Other 2,482 2,392 (24) (a) 2,368 114 4.8%
---------------------------------- ----
Total operating
expenses 7,561 7,146 (24) 7,122 439 6.2%
Operating profit:
U.S. domestic
package 892 832 - 832 60 7.2%
International
package 272 158 - 158 114 72.2%
Non-package 146 90 24 (a) 114 32 28.1%
---------------------------------- ----
Total operating
profit 1,310 1,080 24 1,104 206 18.7%
Other income
(expense):
Investment income 14 10 - 10 4 40.0%
Interest expense (35) (38) - (38) 3 -7.9%
---------------------------------- ----
Total other income
(expense) (21) (28) - (28) 7 -25.0%
Income before income
taxes 1,289 1,052 24 1,076 213 19.8%
Income taxes 471 360 38 (a) 398 73 18.3%
---------------------------------- ----
Net income $ 818 $ 692 $ (14) $ 678 $140 20.6%
================================== ====
Net income as a
percentage of revenue 9.2% 8.4% 8.2%
Per share amounts
Basic earnings per
share $ 0.73 $ 0.61 $ 0.60
Diluted earnings per
share $ 0.72 $ 0.61 $ 0.60
Weighted average
shares outstanding
Basic 1,128 1,127 1,127
Diluted 1,137 1,136 1,136
----------------------------------
(a) The Company recognized a $24 million pre-tax loss and a $38
million tax benefit from the sale of its former Mail Technologies
unit.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
United Parcel Service, Inc.
Selected Operating Data - Second Quarter
Quarter Ended
June 30, Change
----------------- ------------
2004 2003 $ %
------- ------- ----- -----
Revenue (in millions):
U.S. domestic package:
Next day air $ 1,492 $ 1,387 $ 105 7.6%
Deferred 734 716 18 2.5%
Ground 4,254 4,021 233 5.8%
-----------------------
Total U.S. domestic package 6,480 6,124 356 5.8%
International package:
Domestic 318 274 44 16.1%
Export 1,183 992 191 19.3%
Cargo 112 105 7 6.7%
-----------------------
Total International package 1,613 1,371 242 17.7%
Non-package:
UPS Supply Chain Solutions 568 530 38 7.2%
Other 210 201 9 4.5%
-----------------------
Total Non-package 778 731 47 6.4%
-----------------------
Consolidated $ 8,871 $ 8,226 $ 645 7.8%
=======================
Memo: Gross revenue
UPS Supply Chain Solutions $ 1,172 $ 1,068 $ 104 9.7%
Consolidated volume (in millions) 869 833 36 4.2%
Operating weekdays 64 64
Average Daily Package Volume (in
thousands):
U.S. domestic package:
Next day air 1,181 1,179 2 0.2%
Deferred 832 862 (30) -3.5%
Ground 10,252 9,776 476 4.9%
-----------------------
Total U.S. domestic package 12,265 11,817 448 3.8%
International package:
Domestic 784 742 42 5.7%
Export 521 461 60 13.0%
-----------------------
Total International package 1,305 1,203 102 8.5%
-----------------------
Consolidated 13,570 13,020 550 4.2%
=======================
Average Revenue Per Piece:
U.S. domestic package:
Next day air $ 19.74 $ 18.38 $1.36 7.4%
Deferred 13.78 12.98 0.80 6.2%
Ground 6.48 6.43 0.05 0.8%
Total U.S. domestic package 8.26 8.10 0.16 2.0%
International package:
Domestic 6.34 5.77 0.57 9.9%
Export 35.48 33.62 1.86 5.5%
Total International package 17.97 16.44 1.53 9.3%
Consolidated $ 9.19 $ 8.87 $0.32 3.6%
=======================
Certain prior year amounts have been reclassified to conform to
the current year presentation.
United Parcel Service, Inc.
Selected Financial Data - Year-to-Date
Change 2004
Six Months Ended June 30, vs. 2003
-------------------------------------------(as adjusted)
2003 2003 ------------
As 2003 As
2004 Reported Adjustments Adjusted $ %
------------------------------------------- -----------
(financial data in millions,
except per share amounts)
Statement of
Income Data:
Revenue:
U.S.
domestic
package $13,020 $ 12,144 $ - $ 12,144 $ 876 7.2%
Inter-
national
package 3,232 2,673 - 2,673 559 20.9%
Non-package 1,538 1,424 - 1,424 114 8.0%
------------------------------------------- ------
Total
revenue 17,790 16,241 - 16,241 1,549 9.5%
Operating
expenses:
Compensation
and
benefits 10,247 9,462 - 9,462 785 8.3%
Other 5,016 4,754 (24) (a) 4,730 286 6.0%
------------------------------------------- ------
Total
operating
expenses 15,263 14,216 (24) 14,192 1,071 7.5%
Operating
profit:
U.S.
domestic
package 1,723 1,536 - 1,536 187 12.2%
Inter-
national
package 541 292 - 292 249 85.3%
Non-package 263 197 24 (a) 221 42 19.0%
------------------------------------------- ------
Total
operating
profit 2,527 2,025 24 2,049 478 23.3%
Other income
(expense):
Investment
income
(loss) 31 (28) 58 (b) 30 1 3.3%
Interest
expense (74) (63) - (63) (11)17.5%
------------------------------------------- ------
Total other
income
(expense) (43) (91) 58 (33) (10)30.3%
Income before
income taxes 2,484 1,934 82 2,016 468 23.2%
Income taxes 907 631 114 (a),(b),(c) 745 162 21.7%
------------------------------------------- ------
Net income $ 1,577 $ 1,303 $ (32) $ 1,271 $ 306 24.1%
=========================================== ======
Net income as
a percentage
of revenue 8.9% 8.0% 7.8%
Per share
amounts
Basic
earnings
per share $ 1.40 $ 1.16 $ 1.13
Diluted
earnings
per share $ 1.39 $ 1.15 $ 1.12
Weighted
average
shares
outstanding
Basic 1,129 1,126 1,126
Diluted 1,138 1,136 1,136
-------------------------------------------
(a) The Company recognized a $24 million pre-tax loss and a $38
million tax benefit from the sale of its former Mail Technologies
unit in the second quarter of 2003.
(b) The Company recognized a $58 million investment impairment charge
($37 million after tax) during the first quarter of 2003.
(c) The Company recognized a $55 million credit to tax expense for the
resolution of various tax contingencies in the first quarter of
2003.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
United Parcel Service, Inc.
Selected Operating Data - Year-to-Date
Six Months Ended
June 30, Change
----------------- -------------
2004 2003 $ %
------- ------- ------ -----
Revenue (in millions):
U.S. domestic package:
Next day air $ 2,962 $ 2,740 $ 222 8.1%
Deferred 1,498 1,414 84 5.9%
Ground 8,560 7,990 570 7.1%
------------------------
Total U.S. domestic package 13,020 12,144 876 7.2%
International package:
Domestic 654 540 114 21.1%
Export 2,364 1,932 432 22.4%
Cargo 214 201 13 6.5%
------------------------
Total International package 3,232 2,673 559 20.9%
Non-package:
UPS Supply Chain Solutions 1,131 1,030 101 9.8%
Other 407 394 13 3.3%
------------------------
Total Non-package 1,538 1,424 114 8.0%
------------------------
Consolidated $17,790 $16,241 $1,549 9.5%
========================
Memo: Gross revenue
UPS Supply Chain Solutions $ 2,299 $ 2,077 $ 222 10.7%
Consolidated volume (in millions) 1,751 1,659 92 5.5%
Operating weekdays 128 127
Average Daily Package Volume (in
thousands):
U.S. domestic package:
Next day air 1,175 1,157 18 1.6%
Deferred 863 853 10 1.2%
Ground 10,322 9,828 494 5.0%
------------------------
Total U.S. domestic package 12,360 11,838 522 4.4%
International package:
Domestic 797 759 38 5.0%
Export 519 466 53 11.4%
------------------------
Total International package 1,316 1,225 91 7.4%
------------------------
Consolidated 13,676 13,063 613 4.7%
========================
Average Revenue Per Piece:
U.S. domestic package:
Next day air $ 19.69 $ 18.65 $ 1.04 5.6%
Deferred 13.56 13.05 0.51 3.9%
Ground 6.48 6.40 0.08 1.3%
Total U.S. domestic package 8.23 8.08 0.15 1.9%
International package:
Domestic 6.41 5.60 0.81 14.5%
Export 35.59 32.65 2.94 9.0%
Total International package 17.92 15.89 2.03 12.8%
Consolidated $ 9.16 $ 8.81 $ 0.35 4.0%
========================
Certain prior year amounts have been reclassified to conform to
the current year presentation.
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