UPS Releases 3Q 2023 Earnings

November 2, 2023

By Transport Intelligence

UPS has announced third-quarter 2023 consolidated revenues of $21.1bn, a 12.8% decrease from the third quarter of 2022. Consolidated operating profit was $1.3bn, down 56.9% compared to the third quarter of 2022, and down 48.7% on an adjusted basis. Diluted earnings per share were $1.31 for the quarter; adjusted diluted earnings per share of $1.57 were 47.5% below the same period in 2022.

For the third quarter of 2023, GAAP results included an after-tax charge of $219m or $0.26 per diluted share, comprised of a one-time payment of $46m to certain U.S.-based non-union part-time supervisors, transformation and other charges of $70m, and non-cash goodwill impairment charges of $103m.

“While unfavorable macro-economic conditions negatively impacted global demand in the quarter, our U.S. labor contract was fully ratified in early September and volume that diverted during our labor negotiations is starting to return to our network. I want to thank all UPSers for their hard work and efforts during this challenging time and for once again providing industry-leading service to our customers,” said Carol Tomé, UPS chief executive officer. “Looking ahead, we are well-prepared for the peak holiday season.”

U.S. Domestic Segment

	3Q 2023	Adjusted 3Q 2023	3Q 2022	Adjusted 3Q 2022
Revenue	$13,660 M		$15,374 M
Operating profit	$571 M	$665 M	$1,666 M	$1,686 M

• Revenue decreased 11.1%, driven by a 11.5% decrease in average daily volume, which was partially offset by a 2.0% increase in revenue per piece.
• Operating margin was 4.2%; adjusted operating margin was 4.9%.

International Segment

	3Q 2023	Adjusted 3Q 2023	3Q 2022	Adjusted 3Q 2022
Revenue	$4,267 M		$4,799 M
Operating profit	$630 M	$675 M	$997 M	$1,004 M

• Revenue decreased 11.1%, primarily driven by a 6.6% decrease in average daily volume and continued softness on Asia and Europe trade lanes.
• Operating margin was 14.8%; adjusted operating margin was 15.8%.

Supply Chain Solutions¹

	3Q 2023	Adjusted 3Q 2023	3Q 2022	Adjusted 3Q 2022
Revenue	$3,134 M		$3,988 M
Operating profit	$142 M	$275 M	$450 M	$459 M

1 Consists of operating segments that do not meet the criteria of a reportable segment under ASC Topic 280 – Segment Reporting.

• Revenue decreased 21.4% due primarily to market rate and volume declines in forwarding, partially offset by growth in healthcare.
• Operating margin was 4.5%; adjusted operating margin was 8.8%.

2023 Outlook

The company provides certain guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension adjustments or other unanticipated events, which would be included in reported (GAAP) results and could be material.

UPS is updating its full-year 2023 consolidated revenue and adjusted operating margin targets primarily to reflect global macro-economic uncertainty. UPS now expects full-year 2023 consolidated revenue to be between $91.3bn and $92.3bn and a consolidated adjusted operating margin of between 10.8% and 11.3%.

The company is maintaining its full-year planned capital expenditures target of about $5.3bn and dividend payment expectations of around $5.4bn, subject to board approval. UPS now expects full-year 2023 share repurchases to be approximately $2.25bn. The effective tax rate for the full year is expected to be approximately 22%.

Source: UPS