Global Shipments Rise 6.9% to 1.1 Billion U.S. Domestic Operating Margin Improves to 14.7% International Export Packages per Day Climb 9.4% Supply Chain and Freight Operating Margin Hits 8.9% Balanced Growth Across All Segments Drives Operating Profit up 8.3% Reaffirms Full-Year Adjusted EPS Guidance of $4.90 to $5.00 UPS (NYSE:UPS) today announced diluted earnings per share of $1.32 for the third quarter 2014, a 13.8% improvement over the prior year period. Operating profit increased 8.3%, resulting from balanced growth across all three segments. Daily packages in the U.S. were 6.9% higher as demand from both B2C and B2B customers improved. International Export shipments increased 9.4% with strong growth in both Asia and Europe. UPS delivered 1.1 billion packages around the world, up 6.9% over the third quarter 2013. "The solid performance we delivered this quarter establishes our ability to stay ahead of market growth and generate positive operating leverage," said David Abney, UPS chief executive officer. "We continue making investments in technology and expanding our capabilities around the world to ensure we provide the long-term solutions customers demand." Cash Flow For the nine months ended Sept. 30, UPS generated $2.8 billion in free cash flow. The company paid dividends of $1.8 billion, up 8.1% per share over the prior year, and repurchased 20.6 million shares for approximately $2.1 billion. U.S. Domestic Package U.S. Domestic revenue increased to $8.7 billion, up 5.3% over the third quarter 2013. Daily package volume improved 6.9%, led by gains in UPS Ground and Deferred products up 7.7% and 5.9%, respectively. E-commerce continued to drive strong B2C growth, while B2B deliveries were also higher this quarter. Operating profit was $1.3 billion, up 7.8%. Operating margin expanded 30 basis points to 14.7%. The segment experienced positive operating leverage as investments in new technology and capacity helped lower costs. Total revenue per package declined 1.5% as base rate improvements were offset by changes in customer and product mix. UPS SurePost shipments increased more than 50%, contributing to the mix change. During the quarter, UPS announced the expansion of its Access Point alternate delivery solution to the New York City and Chicago areas. Plans were announced to add locations in other U.S. cities, in addition to more than 4,400 existing UPS Stores, by the end of 2015. International Package International revenue increased 5.5% to $3.2 billion on daily package growth of 6.7%. Export products jumped 9.4% with gains from all regions of the world. Shipments out of Asia grew 16% and Europe was up 14%. Operating profit improved 10.3% to $460 million. Operating margin expanded 70 basis points over the prior year period, to 14.5%. Revenue and cost initiatives implemented during the quarter contributed to the margin improvements. Currency-neutral revenue per package declined 1.0% due to changing product mix and continued strength in shorter trade lanes. Non-premium products continue to outpace premium, putting pressure on yield. On October 7, UPS announced the acquisition of international e-commerce enabler i-parcel, LLC. The company's experience and technology in cross-border e-commerce assists U.K. and U.S. based retailers expand their reach to consumers in over 100 countries worldwide. Supply Chain & Freight Supply Chain and Freight revenue was up 7.4% to $2.4 billion, resulting primarily from growth in the Distribution and UPS Freight business units. Operating profit was 7% higher at $215 million, and operating margin was 8.9%. Forwarding revenue was higher primarily due to increased International Air Freight (IAF) tonnage which was aided by high-tech product launches and Government sector gains. Operating profit improvements in North American Air Freight and Ocean Forwarding were more than offset by continued pricing pressure in IAF. Distribution revenue increased more than 10% over the same quarter last year. Strong demand from Healthcare and Retail sector customers contributed to the growth. UPS Freight revenue increased 7.9% to $810 million. LTL shipments were 4.7% higher and revenue per hundredweight improved 1.1%. Operating profit and margin expanded from the third quarter last year. Outlook The company announced its expectations for the upcoming holiday season. UPS expects shipments delivered during the month of December to climb 11% over the prior year. As previously announced, the company committed an additional $175 million in operating expense and $500 million in capital expenditures to enhance its capabilities and prepare the network for peak and future volume growth. "It's encouraging to see all three segments show positive momentum, as we head into our busiest time of year," said Kurt Kuehn, UPS chief financial officer. "We expect another robust peak season and are confident our network is prepared to operate at the highest level. As a result, we are reiterating our expectations for adjusted diluted earnings per share to be in a range of $4.90 to $5.00, a 7-to-9% increase over 2013 adjusted results." Editor's Note: UPS CEO David Abney and CFO Kurt Kuehn will lead a discussion on third quarter results with investors and analysts during a conference call at 8:30 a.m. ET today. That call is open to listeners through a live Webcast. To access the call, go to www.investors.ups.com and click on "Earnings Webcast." UPS routinely posts investor announcements on its website - www.investors.ups.com - and encourages those interested in the company to check there frequently.