UPS Releases 4Q 2019 Earnings

Discussion in 'UPS Pressroom News' started by ROBO MOD, Jan 30, 2020.

  1. ROBO MOD

    ROBO MOD I'm a Robot Staff Member

    Execution, Strategies and Investments Drive Continued Gains and Uniquely Position UPS for Future Success

    • 4Q19 Operating Profit Growth and Margin Expansion in All Segments
    • 4Q19 Positive Operating Leverage Driven by Lower Unit Cost in the U.S.
    • 4Q19 Diluted EPS of ($0.12); Adjusted* Diluted 4Q19 EPS Up 8.8% to $2.11
    • 4Q19 U.S. Daily Volume Grew Nearly 9%; Next Day Air Volume Up Nearly 26%
    • 2019 Cash from Operations of $8.6B; Adjusted Free Cash Flow Topped $4.1B
    • Announces Full-Year 2020 Adjusted EPS Guidance Range of $7.76 to $8.06
    • Speeding up time-in-transit and broadening weekend services in 2020 to capture profitable growth from Small- and Medium-sized Businesses (SMB)

    UPS (NYSE:UPS) today announced fourth-quarter 2019 adjusted earnings per share of $2.11, an 8.8% increase over the same period last year. The company’s results highlight the strong volume growth in the U.S. Domestic segment and the impact of successful execution from all segments.

    “Our network improvements from transformation enabled UPS to embrace a surge in demand for air products while at the same time generate productivity improvements and positive operating leverage,” said David Abney, UPS chairman and CEO. “Looking to 2020, we will continue to adapt to the changing environment, strengthen our network and create new solutions to support our strategic growth initiatives and help our customers grow and compete.”

    In the fourth quarter of 2019, the company incurred a non-cash, after-tax mark-to-market (MTM) pension charge of $1.8 billion, an after-tax transformation charge of $39 million, and U.S. Domestic after-tax legal contingency and expense charges of $91 million, predominantly related to the New York cigarette case. The total impact to EPS was $2.23 per diluted share. MTM pension charges of $1.42 per diluted share were included in the company’s fourth-quarter GAAP results in the prior-year period.

    Operating profit increased more than 16%, and by 17% on an adjusted basis.
    • Logistics, Marken and UPS Freight delivered revenue growth.
    • Logistics and Marken grew profits by double digits, which helped offset softer conditions in Forwarding and truckload brokerage.
    • UPS Freight produced an increase in revenue per LTL (less-than-truckload) hundredweight of 2.5%, driven by its focus on SMBs.
    Full-year 2019 Consolidated Results

    • UPS’s transformation investments generated higher total revenue, operating profit growth and margin expansion in all segments.
    • Full-year 2019 diluted EPS totaled $5.11; adjusted diluted EPS was $7.53, excluding the impacts of the MTM pension charge, transformation charges and legal contingencies.
    • Total revenue increased to $74 billion, driven by strong volume growth in the U.S.
    • Capital expenditures were $6.4 billion, and on an adjusted basis $6.5 billion, to support network enhancements.
    • Annual adjusted free cash flow exceeded $4.1 billion.
    • Dividends paid were $3.3 billion, a per-share increase of 5.5% over the prior year.
    • The company repurchased more than 9 million shares for approximately $1 billion.
    Outlook

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

    “UPS managed through several challenges in 2019, including declines in industrial production,” said Brian Newman, UPS’s chief financial officer. “We were able to leverage the capital investments we have made to grow profits and expand margins, and we are fast-tracking our initiatives in 2020 to better position UPS to capitalize on structural changes in the market and growth opportunities.”

    • Adjusted, diluted earnings per share are expected to be in a range of $7.76 to $8.06, which includes forecasted weakness on the industrial side of the U.S. and global economies as well as spending on SMB initiatives that will significantly increase UPS competitiveness and will be EPS accretive in 2021.
    • The 2020 effective tax rate is expected to be between 22.5 and 23.5 percent.
    • Capital expenditures are planned to be around $6.7 billion, primarily to support global facility and automation expansions.
    • Cash from operations is expected to be around $10 billion and free cash flow is anticipated to be between $4.3 and $4.7 billion.
    • Transformation charges are excluded from guidance.