United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q4 2022 Earnings Presentation
36 slides from United Parcel Service's earnings presentation, Jan 31, 2023
Slide 1: 4Q22 Earnings Call
4Q22 Earnings Call January 31, 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: Speakers
UPS Speakers Carol B. Tomé Chief Executive Officer Brian Newman Chief Financial Officer © 2021 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. 3
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 work stoppages or slowdowns by our employees; results of negotiations and ratifications of in the future may contain “forward-l
Slide 5: Diluted EPS
Diluted EPS 4Q22 4Q21 $4.50 $4.50 $3.96 ($0.90) $4.00 $4.00 $0.05 $3.62* $0.05 $3.59* $0.44 $0.07 $3.52 $0.02 $3.50 $3.50 $3.00 $3.00 $2.50 $2.50 $2.00 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 4Q22 EPS Pension Incentive Aircraft Residual Transformation 4Q22 4Q21 EPS Pension Adj. Transfo
Slide 6: Carol B. Tomé, Chief Executive Officer
Carol B. Tomé Chief Executive Officer 6
Slide 7: Five years of industry-leading service during peak
Five years of industry–leading service during peak Thank You
Slide 8: Reached Full-year Adjusted Operating Margin and ROIC Targets Early
Reached Full-year Consolidated Adjusted Operating Margin* and ROIC* Targets Early GAAP Adjusted In $ Millions In $ Millions 4Q22 4Q21 Change 4Q22 4Q21 Change (except per share) (except per share) Total Revenue $27,033 $27,771 -2.7% Total Revenue $27,033 $27,771 -2.7% Operating Profit $3,195 $3,891 -
Slide 9: Customer First, People Led, Innovation Driven
Customer First, People Led, Innovation Driven • Generated >$2.3B in DAP revenue in 2022; expect to generate ~$3B in 2023 • Healthcare portfolio generated $9.2B in revenue in 2022; expect >$10B in 2023 • Made strong gains on all 16 customer journeys and the improvement in our Net Promoter Score outpa
Slide 10: Board Approves Dividend Increase and New Share Repurchase Authorization
UPS Board of Directors Approves Dividend Increase and New Share Repurchase Authorization $7.00 $6.48 14th Consecutive Year of $6.08 Increased Dividend $6.00 • UPS Board of Directors approved a quarterly $5.00 dividend of $1.62 per share $4.04 $4.08 $3.84 $4.00 $3.64 o 14th consecutive year UPS has i
Slide 11: Brian Newman, Chief Financial Officer
Brian Newman Chief Financial Officer 11
Slide 12: Consolidated Results
Consolidated Results GAAP Adjusted In $ Millions In $ Millions 4Q22 4Q21 Change 4Q22 4Q21 Change (except per share) (except per share) Total Revenue $27,033 $27,771 -2.7% Total Revenue $27,033 $27,771 -2.7% Operating Profit $3,195 $3,891 -17.9% Operating Profit* $3,822 $3,952 -3.3% 4Q Operating Marg
Slide 13: U.S. Domestic: 4Q Average Daily Volume Declined 3.8%
U.S. Domestic 4Q Average Daily Volume Declined 3.8% Tenth consecutive quarter of increased SMB penetration Monthly B2C ADV (Y/Y) 4Q22 ADV Change (Y/Y) • B2C declined 3.0% 15% • Split was 65% B2C -3.8% vs. Last Year 26,000 5% -5% -156 -337 25,194 25,000 -463 In Thousands -15% Jan Feb Mar Apr May Jun
Slide 14: U.S. Domestic: 4Q Revenue of $18.3B, Up 3.1% YOY
U.S. Domestic 4Q Revenue of $18.3B, Up 3.1% YOY Improvements in revenue quality more than offset the decline in volume Revenue Change (Y/Y) Revenue Per Piece 2021 2022 $12.50 +3.1% vs. Last Year $11.50 $10.50 +$1.2B $18.3B $18.0 $9.50 1Q 2Q 3Q 4Q In Billions $17.7B -$672M • 4Q revenue per piece grow
Slide 15: U.S. Domestic: 4Q Adj. Operating Profit and Margin Increased YOY
U.S. Domestic 4Q Adj. Operating Profit* and Adj. Operating Margin* Increased YOY Delivered industry-leading service for the fifth consecutive peak season Operating Profit (In Millions) ($263) • GAAP operating expense increased 5.2% GAAP $2,103 $1,840 • Adjusted operating expense* increased 2.5% o Hi
Slide 16: International: 4Q Total Average Daily Volume Down 8.6%
International 4Q Total Average Daily Volume Down 8.6% Domestic ADV down 12.9%; Export ADV down 4.0% Asia Monthly ADV (Y/Y) Europe Monthly ADV (Y/Y) 0% 10% 0% -10% -10% -20% -20% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2022 Americas Monthly
Slide 17: International: Generated Operating Profit Over $1.0B
International Generated Operating Profit Over $1.0B Remained agile and flexed our network in response to changing market conditions Operating Profit (In Millions) • Quickly adjusted our network in response to volume levels, maintained high service GAAP $1,326 ($306) levels, and achieved a payload ut
Slide 18: Supply Chain Solutions: Logistics Growth Offset Forwarding Declines
Supply Chain Solutions Growth in Logistics Partially Offset Declines in Forwarding Revenue Operating Profit (In Millions) • Generated revenue of $3.8B, a decline of ($127) $462 $846M year over year GAAP $335 o Softer global demand drove down 4Q21 Operating Profit Performance 4Q22 Operating Profit Fo
Slide 19: Full-year 2022 Adjusted Results
Full-year 2022 Adjusted Results Revenue Adjusted Op Profit* $100.3B $13.9B $13.1B $97.3B 2021 2022 2021 2022 Adjusted Op Margin* Return on Invested Capital* 13.8% 31.3% 13.5% 30.8% 2021 2022 2021 2022 Exceeded 2021 Investor Day Targets For Consolidated Adjusted Operating Margin* and ROIC* Ahead of S
Slide 20: 2022 Cash Flow and Adjusted Debt to EBITDA
2022 Cash Flow and Adjusted Debt to EBITDA* CapEx of Around $4.8B Free Cash Flow* of $9.0B $14.1B $9.0B -$4.8B -$0.3B $1.7B $1.3B $1.1B $723M Buildings & Aircraft Vehicles IT Facilities Cash Flows CapEx Other Investing Free Cash Flow* from Operations Activities Total Return to Shareholders of $8.6B
Slide 21: GAAP Full-year 2022 Segment Highlights
GAAP Full-year 2022 Segment Highlights GAAP Full-year 2022 U.S. Domestic International SCS Operating Profit $7.0B $4.3B $1.8B Operating Profit Growth Y/Y 8.7% -6.9% 2.5% Operating Margin 10.9% 22.0% 10.8% Operating Margin BP Change Y/Y +20 bps -180 bps +90 bps * Non-GAAP financial measure. See Appen
Slide 22: Adjusted Full-year 2022 Segment Highlights
Adjusted Full-year 2022 Segment Highlights Adjusted Full-year 2022 U.S. Domestic International SCS Adjusted Operating Profit* $7.6B $4.4B $1.9B Adjusted Operating Profit Growth Y/Y * 12.8% -6.4% 9.0% Adjusted Operating Margin * 11.8% 22.4% 11.3% Adjusted Operating Margin BP Change Y/Y* +70 bps -180
Slide 23: 2023 Full-year Outlook
2023 Full-year Outlook Multiple plan scenarios enable us to quickly pivot in an uncertain environment - Uncertain macro environment Full-year 2023 Outlook • Rising interest rates • Consolidated: • High inflation o Revenue between $97.0B - $99.4B • Recession forecasts o Adjusted operating margin* bet
Slide 24: 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. 24
Slide 25: 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. 25
Slide 26: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Non-GAAP Financial Measures; Reconciliations operating performance of our business units, making decisions to allocate resources or in determining incentive compensation awards. From time to time we supplement the reporting of our financial info
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
Slide 31: 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. 31
Slide 32: 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. 32
Slide 33: 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. 33
Slide 34: UPS Pension Overview
UPS Pension Overview Framework • UPS actively manages pensions to improve predictability, balance operating expense, cash and balance sheet objectives, and reduce risk • UPS continues to look for opportunistic ways to lower long-term risk Market Conditions • Significant increase in discount rates in
Slide 35: 2022 Mark-to-Market Impact to Shareowners' Equity
2022 Mark-to-Market Impact to Shareowners’ Equity (in millions) Unrecognized Loss Within Shareowners’ Equity as of 12/31/2021 $2,074 Net loss due to changes in demographic data and assumptions 244 Including turnover, salaries, medical claims costs, other Gain due to discount rate change (21,146) Dis
Slide 36: Pension and 401(k)
Pension and 401(k) Income Statement Balance Sheet / Cash Flow Above the line • In 2023, we expect annual pension contributions to We expect a net year-over-year benefit to operating approximate our expected service cost profit of $420M for full-year 2023 from a combination of: • Lower service costs
United Parcel Service — Q4 2022 Earnings Presentation on 6ix