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    United Parcel Service Inc (UPS)

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    United Parcel Service, Inc. (UPS) is a leading global package delivery company and provider of supply chain management solutions . The company operates through two main reportable segments: U.S. Domestic Package and International Package, collectively referred to as global small package operations, and Supply Chain Solutions . UPS's services include transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance . The company also operates one of the largest airlines and fleets of alternative fuel vehicles globally .

    1. Global Small Package Operations - Provides time-definite delivery services for express letters, documents, small packages, and palletized freight via air and ground services. This segment includes:
      • U.S. Domestic Package - Involves the time-definite delivery of letters, documents, and packages throughout the United States .
      • International Package - Covers delivery to over 200 countries and territories worldwide .
    2. Supply Chain Solutions - Offers transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services .
    NamePositionStart DateShort Bio
    Carol B. ToméChief Executive OfficerJune 2020Carol B. Tomé has been serving as the CEO of UPS since June 2020. She was previously the CFO of The Home Depot, Inc. from 2001 until her retirement in 2019 .
    Norman M. Brothers, Jr.Executive Vice President; Chief Legal and Compliance Officer and Corporate Secretary2020Norman M. Brothers, Jr. is the EVP, Chief Legal and Compliance Officer, and Corporate Secretary at UPS since 2020. He was previously SVP, General Counsel, and Corporate Secretary from 2016 to 2020 .
    Nando CesaroneExecutive Vice President; President, U.S.2020Nando Cesarone has been the EVP and President, U.S. at UPS since 2020. He was previously the President of UPS International from 2018 to 2020 .
    Darrell FordExecutive Vice President; Chief Human Resources Officer and Chief Diversity, Equity and Inclusion Officer2022Darrell Ford has held his current position since 2022. He was previously the Chief Human Resources Officer from 2021 to 2022 .
    Matt GuffeyExecutive Vice President; Chief Commercial and Strategy Officer2024Matt Guffey became the EVP and Chief Commercial and Strategy Officer in 2024. He was previously SVP, Global Strategy from 2020 to 2023 .
    Kate M. GutmannExecutive Vice President; President International, Healthcare and Supply Chain Solutions2022Kate M. Gutmann has been in her current role since 2022. She was previously the Chief Sales and Solutions Officer and EVP, UPS Global Healthcare from 2020 to 2022 .
    Laura LaneExecutive Vice President; Chief Corporate Affairs, Communications and Sustainability Officer2020Laura Lane has held this position since 2020. She was previously the Chief Corporate Affairs and Communications Officer from August 2020 to October 2020 .
    Brian NewmanExecutive Vice President; Chief Financial Officer2021Brian Newman has been the EVP and CFO at UPS since 2021. He was previously the CFO and Treasurer from 2019 to 2021 .
    Bala SubramanianExecutive Vice President; Chief Digital and Technology OfficerJuly 2022Bala Subramanian joined UPS in July 2022. He was previously the Chief Digital Officer at AT&T Inc. from 2018 to 2022 .
    Brian DykesExecutive Vice President and Chief Financial Officer2024Brian Dykes became the EVP and CFO at UPS in 2024, bringing over 25 years of multinational experience with the company .
    1. With the completion of 45 operational closures and the removal of about 1 million ADV per day of capacity, how will this reduction affect your ability to handle increased volumes during the compressed peak holiday season, especially given the expected surge on December 18?

    2. Revenue per piece in the U.S. Domestic segment declined 2.2% year-over-year, impacted by factors like lighter weights and shorter zones; what strategies are you implementing to sustain revenue quality improvements amidst these ongoing pressures?

    3. Considering the sale of Coyote and the acquisition of Frigo-Trans, how do these moves align with your long-term growth strategy in Supply Chain Solutions, and what are the anticipated impacts on your operating margins in this segment?

    4. Given the macro environment was worse than expected, with slowing online sales and lower manufacturing activity, how confident are you in achieving your updated full-year revenue of approximately $91.1 billion, and what contingency plans are in place if economic conditions deteriorate further?

    5. As union wage rate growth slowed to 5.2% and productivity initiatives offset 50% of the wage increase, can you provide more detail on how you plan to continue driving cost efficiencies without compromising service levels, particularly as you execute additional projects in 2025?

    Program DetailsProgram 1Program 2
    Approval DateAugust 2021 January 2023
    End Date/DurationTerminated January 2023 Ongoing as of September 30, 2024
    Total additional amount$5.0 billion $5.0 billion
    Remaining authorization amountN/A$2.3 billion as of September 30, 2024
    DetailsTerminated Active, aims to repurchase about $1 billion annually
    YearAmount Due (in millions)Debt TypeInterest Rate% of Total Debt
    2024$1,606Current Maturities of Long-Term Debt, Commercial Paper, and Finance LeasesN/A7.3% = (1,606M / 21,930M) * 100
    2024$699Current Maturities of Operating LeasesN/A3.2% = (699M / 21,930M) * 100
    2025$1,9993.900% Senior Notes3.900% 9.1% = (1,999M / 21,930M) * 100
    2026$4992.400% Senior Notes2.400% 2.3% = (499M / 21,930M) * 100
    2027$9973.050% Senior Notes3.050% 4.5% = (997M / 21,930M) * 100
    2029$1,1463.400% Senior Notes, 2.500% Senior Notes3.400% 2.500% 5.2% = (1,146M / 21,930M) * 100
    2030$1,5194.450% Senior Notes, 7.620% Debentures4.450% 7.620% 6.9% = (1,519M / 21,930M) * 100
    2031$885.500% Pound Sterling Notes5.500% 0.4% = (88M / 21,930M) * 100
    2032$5571.500% Euro Senior Notes1.500% 2.5% = (557M / 21,930M) * 100
    2033$8954.875% Senior Notes4.875% 4.1% = (895M / 21,930M) * 100
    2034$8935.150% Senior Notes5.150% 4.1% = (893M / 21,930M) * 100
    2038$1,4866.200% Senior Notes6.200% 6.8% = (1,486M / 21,930M) * 100
    2040$9855.200% Senior Notes, 4.875% Senior Notes5.200% 4.875% 4.5% = (985M / 21,930M) * 100
    2042$3693.625% Senior Notes3.625% 1.7% = (369M / 21,930M) * 100
    2046$4923.400% Senior Notes3.400% 2.2% = (492M / 21,930M) * 100
    2047$1,1383.750% Senior Notes3.750% 5.2% = (1,138M / 21,930M) * 100
    2049$1,4323.400% Senior Notes, 4.250% Senior Notes, Floating-Rate Senior Notes3.400% 4.250% Floating Rate 6.5% = (1,432M / 21,930M) * 100
    2050$1,8105.300% Senior Notes, 5.125% Pound Sterling Notes5.300% 5.125% 8.3% = (1,810M / 21,930M) * 100
    2053$1,0835.050% Senior Notes5.050% 4.9% = (1,083M / 21,930M) * 100
    2054$1,0875.500% Senior Notes5.500% 5.0% = (1,087M / 21,930M) * 100
    2064$5905.600% Senior Notes5.600% 2.7% = (590M / 21,930M) * 100
    2049-2074$1,755Floating-Rate Senior NotesFloating Rate 8.0% = (1,755M / 21,930M) * 100
    NameStart DateEnd DateReason for Change
    Deloitte & Touche LLP1969 PresentCurrent auditor

    Recent developments and announcements about UPS.

    Financial Reporting

      Earnings Call

      ·
      6 days ago

      UPS has released its fourth-quarter 2024 earnings call transcript, providing key insights into its financial performance, strategic initiatives, and market outlook for 2025. Below is a summary of the key points:

      Financial Performance

      • Q4 2024 Results:
        • Revenue: $25.3 billion, up 1.5% year-over-year.
        • Operating Profit: $3.1 billion, an 11.2% increase year-over-year.
        • Operating Margin: 12.3%, up 110 basis points from Q4 2023.
        • Diluted EPS: $2.75, an 11.3% increase year-over-year.
      • Full-Year 2024 Results:
        • Revenue: $91.1 billion, slightly above 2023.
        • Operating Profit: $8.9 billion, with a consolidated operating margin of 9.8%.
        • Cash from Operations: $10.1 billion, with $5.9 billion returned to shareholders via dividends and share repurchases.

      Strategic Initiatives

      • Network Reconfiguration:
        • UPS is undergoing its largest network reconfiguration to align capacity with expected volume levels, including closing up to 10% of its buildings and reducing its vehicle and aircraft fleets.
        • The "Efficiency Reimagined" initiative aims to deliver $1 billion in cost savings through process improvements.
      • Healthcare Logistics Expansion:
        • Healthcare revenue reached $10.5 billion in 2024, with plans to grow to $20 billion by 2026.
        • Recent acquisitions, such as Frigo-Trans, and new facilities in Europe are enhancing cold chain capabilities.
      • Focus on SMBs:
        • SMBs accounted for 28.9% of U.S. volume in 2024, with plans to increase this to 32% in 2025 and 35% by 2026.

      Market Outlook and Guidance

      • 2025 Financial Outlook:
        • Revenue: $89 billion, reflecting a 2.3% decline due to volume reductions.
        • Operating Margin: Expected to improve to 10.8%.
        • Free Cash Flow: Projected at $5.7 billion, with $3.5 billion in capital expenditures.
      • Volume and Pricing:
        • U.S. Domestic ADV is expected to decline by 8.5%, offset by a 6% increase in revenue per piece.
        • International ADV is projected to grow mid-single digits, with revenue increasing by 2.5%.

      Analyst Questions and Management Responses

      • Amazon Volume Reduction:
        • Amazon accounted for 11.8% of UPS's total revenue in 2024. UPS is accelerating the glide-down of Amazon volumes, reducing them by 50% by the second half of 2026.
        • Management emphasized that this decision was driven by UPS to improve customer mix and profitability.
      • Competitive Landscape:
        • UPS highlighted its focus on differentiated capabilities, such as RFID tagging and healthcare logistics, to maintain a competitive edge.
        • The company is leveraging its pricing technology to optimize revenue per piece and win in premium segments.

      Key Takeaways

      UPS is navigating a transformative period, focusing on higher-margin business segments like healthcare and SMBs while reducing reliance on low-margin volume from its largest customer. The company is confident in its ability to grow operating margins and profit dollars in 2025 and beyond, despite anticipated volume declines.

      For further details, please refer to the full earnings call transcript.

      Earnings Report

      ·
      6 days ago

      UPS has released its fourth-quarter 2024 earnings results, showing a 1.5% increase in consolidated revenues to $25.3 billion compared to the same quarter last year. The consolidated operating profit rose by 18.1% to $2.9 billion, with a non-GAAP adjusted increase of 11.2%. The diluted earnings per share (EPS) for the quarter was $2.01, while the non-GAAP adjusted diluted EPS was $2.75, marking an 11.3% increase from the previous year.

      Key Segment Performance:

      • U.S. Domestic Segment: Revenue increased by 2.2%, driven by a 2.4% increase in revenue per piece and growth in air cargo. The operating margin was 9.7%, with a non-GAAP adjusted margin of 10.1%.
      • International Segment: Revenue grew by 6.9%, supported by an 8.8% increase in average daily volume. The operating margin was 20.7%, with a non-GAAP adjusted margin of 21.6%.
      • Supply Chain Solutions: Revenue declined by 9.1% due to the divestiture of Coyote, although there was growth in air and ocean forwarding. The operating margin was 7.4%, with a non-GAAP adjusted margin of 9.3%.

      Full-Year 2024 Highlights:

      • Total revenue was $91.1 billion.
      • Operating profit was $8.5 billion, with a non-GAAP adjusted profit of $8.9 billion.
      • The operating margin was 9.3%, with a non-GAAP adjusted margin of 9.8%.
      • Diluted EPS was $6.75, with a non-GAAP adjusted EPS of $7.72.
      • Cash from operations was $10.1 billion, and non-GAAP adjusted free cash flow was $6.3 billion.

      2025 Outlook: UPS expects revenue to be approximately $89.0 billion with an operating margin of about 10.8%. The company plans capital expenditures of around $3.5 billion, dividend payments of approximately $5.5 billion, and share repurchases of about $1.0 billion. The effective tax rate is expected to be around 23.5%.