United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q2 2023 Earnings Presentation
30 slides from United Parcel Service's earnings presentation, Aug 8, 2023
Slide 1: 2Q23 Earnings Call
2Q23 Earnings Call August 8, 2023 © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 1
Slide 2: Ken Cook, Investor Relations Officer
Ken Cook Investor Relations Officer 2
Slide 3: UPS Speakers
UPS Speakers Carol B. Tomé Chief Executive Officer Brian Newman Chief Financial Officer 3 © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved.
Slide 4: Forward-Looking Statements and Non-GAAP Reconciliations
Forward-Looking Statements and Non-GAAP Reconciliations Forward-Looking Statements This presentation and our filings with the Securities and Exchange Commission contain and realize the anticipated benefits from acquisitions, dispositions, joint ventures or strategic in the future may contain “forwar
Slide 5: Diluted EPS 2Q23 vs 2Q22
Diluted EPS 2Q23 2Q22 $4.00 $4.00 $3.50 $3.50 $3.25 $0.04 $3.29* $3.00 $3.00 $0.12 $2.54* $2.50 $2.42 $2.50 $2.00 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 2Q23 EPS Transformation & Other 2Q23 Adj. EPS* 2Q22 EPS Transformation & Other 2Q22 Adj. EPS* © 2023 United Parcel Service of Americ
Slide 6: Carol B. Tomé, Chief Executive Officer
Carol B. Tomé Chief Executive Officer 6
Slide 7: Thank You
To UPSers around the world and our customers who trusted us with their business… Reached Thank WIN-WIN-WIN You Labor Contract
Slide 8: 2Q23 Consolidated Results
2Q23 Consolidated Results In $ Millions 2Q23 2Q22 Change Y/Y (except per share) Total Revenue $22,055 $24,766 -10.9% Adj. Operating Profit* $2,919 $3,576 -18.4% Adj. Operating Margin* 13.2% 14.4% -120 bps Adj. Diluted EPS* $2.54 $3.29 -22.8% “When faced with volume declines, some companies might go
Slide 9: Customer First. People Led. Innovation Driven.
Customer First. People Led. Innovation Driven. • 500+ UPS executives had regular communication with many customers to keep them informed during labor negotiations, bringing us closer to our customers • Laser focused on win-back and pulling through >$7B of opportunity in sales pipeline by leveraging
Slide 10: Customer First. People Led. Innovation Driven.
Customer First. People Led. Innovation Driven. Win-win-win labor contract expected to be ratified in two weeks: • Converting 22.4 employees to regular package car drivers, maintaining weekend delivery for our customers and more work-life balance for our drivers • Improving working conditions, includ
Slide 11: Customer First. People Led. Innovation Driven.
Customer First. People Led. Innovation Driven. • Leveraged our integrated network — powered by Network Planning Tools and technology developed by UPS engineers — to reduce U.S. hours by nearly 10%, in line with the decline in average daily volume • Operating nearly 50% of U.S. buildings with smart p
Slide 12: Closing Comments
Closing Comments Updated our full-year 2023 guidance primarily to reflect the volume impact from labor negotiations and the costs associated with the tentative agreement Focused on our future • Executing our winning strategy under our better and bolder framework • Winning in the best parts of the ma
Slide 13: Brian Newman, Chief Financial Officer
Brian Newman Chief Financial Officer 13
Slide 14: 2Q23 Consolidated Results
2Q23 Consolidated Results In $ Millions 2Q23 2Q22 Change Y/Y (except per share) Total Revenue $22,055 $24,766 -10.9% Adj. Operating Profit* $2,919 $3,576 -18.4% Adj. Operating Margin* 13.2% 14.4% -120 bps Adj. Diluted EPS* $2.54 $3.29 -22.8% “All three of our segments demonstrated agility and on a c
Slide 15: U.S. Domestic: 2Q Average Daily Volume Declined 9.9%
U.S. Domestic 2Q Average Daily Volume Declined 9.9% Volume diversion increased as noise levels around labor negotiations grew louder ADV Change (Y/Y) Monthly ADV Growth (Y/Y) 3.0% -9.9% vs. Last Year -1.0% 21,000 -5.0% -231 -314 -12.1% -1,400 -9.0% 19,685 -22.4% 19,000 In Thousands -13.0% JAN FEB MA
Slide 16: U.S. Domestic: 2Q Revenue of $14.4B, Down 6.9% YOY
U.S. Domestic 2Q Revenue of $14.4B, Down 6.9% YOY Disciplined approach to revenue quality drove revenue per piece up 3.3% Revenue Change (Y/Y) Revenue Per Piece LY TY $12.80 -6.9% vs. Last Year $15.0 $15.5B -$1.5B $11.30 1Q 2Q 3Q 4Q In Billions +$464M $14.4B $14.0 • 2Q revenue per piece (RPP) growth
Slide 17: U.S. Domestic: 2Q Adjusted Operating Margin of 11.7%
U.S. Domestic 2Q Adjusted Operating Margin* of 11.7% Leveraged technology and agility of our integrated network to reduce cost by $889M YOY U.S. Domestic Results • Adjusted operating expense* decreased 6.5% YOY o Continued executing Total Service Plan to lower Change 2Q23 2Q22 hours by ~10%, in line
Slide 18: International: 2Q Average Daily Volume down 6.6%
International 2Q International Average Daily Volume down 6.6% Domestic ADV down 8.7%; Export ADV down 4.5% Total Asia Monthly ADV (Y/Y) Total Europe Monthly ADV (Y/Y) 20% 12% 10% 6% 0% -10% 0% -20% -6% -30% -12% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Slide 19: International: Generated Adjusted Operating Profit of $902M
International Generated Adjusted Operating Profit* of $902M Agility of integrated network enabled us to match capacity with demand International Results • Generated revenue of $4.4B, down 13.0% YOY Change 2Q23 2Q22 Y/Y • Revenue per piece declined 5.7% YOY due primarily to lower fuel surcharge reven
Slide 20: Supply Chain Solutions: Navigated Challenging Macro Environment
Supply Chain Solutions Navigated Challenging Macro Environment While Reducing Cost Supply Chain Solutions Results Change • Revenue of $3.2B, down $990M YOY 2Q23 2Q22 Y/Y o Soft global demand, especially out of Asia, drove down Forwarding market rates and Total $3.2B $4.2B -23.4% volume Revenue o Log
Slide 21: 2Q23 YTD Cash Flow and Dividends
2Q23 YTD Cash Flow and Dividends 2Q23 YTD Cash From Operations 2Q23 YTD Free Cash Flow* $5.6B $3.8B -$2.7B Y/Y -$3.1B Y/Y Discretionary pension contribution increased $1.2B Y/Y due to YTD CapEx spend of $1.8B timing of the payments 2Q23 YTD Dividends Paid 2Q23 YTD Share Buy Backs $2.7B $1.5B $3.24 p
Slide 22: 2023 Full-year Outlook
2023 Full-year Outlook Full-year 2023 Consolidated Outlook Now that labor • Revenue of about $93B negotiations are • Adjusted operating margin* of around 11.8% • Capital expenditures of ~$5.3B behind us, we’ve • Dividend payout of ~$5.4B and share repurchases ~$3B updated our guidance for the full 2
Slide 23: Questions & Answers
Questions & Answers © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 23
Slide 24: Appendix
Appendix © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 24
Slide 25: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Non-GAAP Financial Measures; Reconciliations From time to time we supplement the reporting of our financial information determined under generally accepted Transformation Charges, and Goodwill, Asset Impairment and Divestiture Charges accounting
Slide 26: Reconciliations
Reconciliations © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 26
Slide 27: Reconciliations
Reconciliations © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 27
Slide 28: Reconciliations
Reconciliations © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 28
Slide 29: Reconciliations
Reconciliations © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 29
Slide 30: Reconciliations
Reconciliations © 2023 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 30
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