United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q1 2021 Earnings Presentation
28 slides from United Parcel Service's earnings presentation, Apr 27, 2021
Slide 1: 1Q21 Earnings Call
1Q21 Earnings Call April 27, 2021
Slide 2: Scott Childress, Investor Relations Officer
Scott Childress Investor Relations Officer 2
Slide 3: UPS 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 health, retiree health and/or pension benefits; potential additional U.S. or international tax liabilities; potential claims or litigation related to labor and employment, personal injury, property damage, business pr
Slide 5: Diluted EPS
Diluted EPS 1Q21 1Q20 $6.00 $5.47 ($2.86) $6.00 $5.00 $5.00 $4.00 $4.00 $3.00 $0.16 $2.77* $3.00 $2.00 $2.00 $1.11 $0.04 $1.15* $1.00 $1.00 $0.00 $0.00 1Q20 EPS Transformation & Other 1Q20 Adj. EPS* 1Q21 EPS Pension MTM Transformation & 1Q21 Adj. EPS* Adjustment Other * Non-GAAP financial measure. S
Slide 6: Carol Tomé, Chief Executive Officer
Carol Tomé Chief Executive Officer 6
Slide 7: Thank You UPSers
Thank You UPSers © 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.
Slide 8: Consolidated Results
Consolidated Results GAAP Adjusted In $ Millions % In $ Millions % (except per share) 1Q21 1Q20 1Q21 1Q20 Change (except per share) Change Revenue $22,908 $18,035 27.0% Revenue $22,908 $18,035 27.0% Operating Profit $2,765 $1,072 157.9% Operating Profit* $2,949 $1,117 164.0% Operating Margin 12.1% 5
Slide 9: Operationalizing Our Strategy
Operationalizing Our Strategy Through a Better Not Bigger Framework • Creating capabilities that enable us to capture most attractive segments of the market: o Grew SMB ADV by 35.6% in the U.S., and 23% Int’l in Q1 Customer First • Reinstated Next Day Air and Worldwide Express service guarantees Net
Slide 10: Brian Newman, Chief Financial Officer
Brian Newman Chief Financial Officer 10
Slide 11: Macro Environment
Macro Environment 2021 Forecasts Have Moved Higher Global GDP for 2021 expected to grow 5.3%; U.S. nominal retail sales is U.S. GDP for 2021 expected anticipated to grow 11.7% to grow 6.2% U.S. industrial production forecast to increase 6.5% UPS expects the imbalance between market demand and indust
Slide 12: U.S. Domestic Average Daily Volume Grew 12.8%, Led by B2C
U.S. Domestic Average Daily Volume Grew 12.8%, Led by B2C B2B average daily volume declined 0.6%, but turned positive in March 1Q21 Monthly B2C ADV (Y/Y) • B2C grew 23.8% 80% • Split was 60% B2C +12.8% vs. Last Year 60% 40% +2,158 20% 20,000 20,352 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 13: U.S. Domestic Revenue Increased 22.3% to $14.0B
U.S. Domestic Revenue Increased 22.3% to $14.0B RPP increased 10.2%, driven by strong SMB ADV growth and demand-related surcharges U.S. Revenue Per Piece (Y/Y) 15% +10.2% 10% +22.3% vs. Last Year 5% $14.5 0% -5% +$1.2B $14.0B $13.5 -10% 1Q20 2Q20 3Q20 4Q20 1Q21 In Billions $12.5 +$1.3B $11.5 Stron
Slide 14: U.S. Domestic Operating Profit and Margin Increased YoY
U.S. Domestic U.S. Domestic Operating Profit and Margin Increased YoY Results driven by combination of revenue-quality initiatives and productivity efforts Operating Profit (In Millions) $995 $1,359 Controlled costs by quickly transitioning GAAP $364 from Q4 to non-peak operations 1Q20 Operating P
Slide 15: International Average Daily Volume Up 23.1%
International Average Daily Volume Up 23.1% B2C ADV Increased 77.6%; While B2B ADV Grew 10.1% Asia Monthly ADV (Y/Y) Europe Monthly ADV (Y/Y) 40% 70% 30% 45% 20% 20% 10% -5% 0% -30% -10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec This Year Last Ye
Slide 16: International Generated $1.1B of Operating Profit
International International Generated $1.1B of Operating Profit Generated positive operating leverage with RPP up 12.3% Operating Profit (In Millions) Revenue up 36.2% to $4.6 billion +$534 $1,085 All regions reported revenue growth GAAP over 20% $551 Asia export volume up 43.0%; 1Q20 Operatin
Slide 17: SC&F Generated Record Adjusted Profit and Operating Margin
Supply Chain and Freight SC&F Generated Record Adjusted* Profit and Operating Margin Operating Profit (In Millions) Forwarding led the way, driven by strong $164 $321 growth on the outbound Asia lane; both GAAP $157 air and ocean 1Q20 Operating Profit Performance 1Q21 Operating Profit Healthcare
Slide 18: Cash and Shareowner Returns
Cash and Shareowner Returns 1Q21 Cash from Operations of $4.5B The UPS Dividend is a Hallmark of Our and Free Cash Flow* of $3.7B Financial Strength $4.25 $12.0 $4.08 $4.04 $10.0 $3.84 $8.0 $3.75 $3.64 In Billions $6.0 $3.32 $4.0 $3.25 $2.0 $0.0 1Q 2Q 3Q 4Q $2.75 CFO 2021 CFO 2020 FCF* 2021 FCF* 202
Slide 19: Outlook for 2021
Outlook for 2021 Due to uncertainty ahead, UPS is not providing revenue or diluted earnings per share guidance at this time Some things to consider: We expect the sale of UPS Freight to close in 2Q21 Capital expenditures expected to be about $4.0B No plans to repurchase shares Effective
Slide 20: Strong Balance Sheet is a Core UPS Principle
Strong Balance Sheet is a Core UPS Principle Pension Liability* $16.0 Repaid $1.5B of long-term debt in 1Q21 $12.0 In Billions $8.0 On March 11, the American Rescue Plan Act was $4.0 signed into law which reduced pension liability by $6.4B: $0.0 2018 2019 2020 1Q21 Eliminated our balance sheet
Slide 21: Questions & Answers
Questions & Answers © 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. 21
Slide 22: Appendix
Appendix © 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. 22
Slide 23: Pension Legislation Overview
Pension Legislation Overview American Rescue Plan Act (ARPA) of 2021 was Signed Into Law on March 11, 2021 • ARPA allows qualifying multi-employer pension plans that are in danger of insolvency to receive lump sum financial assistance to pay participants’ unreduced benefits through 2051 • As part of
Slide 24: 1Q21 MTM Impact – UPS/IBT Plan
1Q21 MTM Impact – UPS/IBT Plan Impact to Income Statement (in millions) Unrecognized Loss Within Shareowners’ Equity as of 12/31/2020 $7,019 Gain due to discount rate change (1,276) Discount rate increased from 2.98% to 3.70%1 Gain due to discount rate change related to CSPF coordinating benefits ob
Slide 25: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Reconciliation of GAAP and non-GAAP Financial Measures We supplement the reporting of our financial information determined under generally accepted Mark-To-Market Pension and Postretirement Adjustments accounting principles ("GAAP") with certain
Slide 26: Reconciliations
Reconciliations Reconciliation of GAAP and Non-GAAP Income Statement Reconciliation of GAAP and Non-GAAP Income Statement (in millions, except per share amounts): (in millions, except per share amounts): Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 As-Reported Pension Transfor
Slide 27: Reconciliations
Reconciliations Reconciliation of GAAP and Non-GAAP Revenue, Revenue Per Piece, and Adjusted Operating Profit (in millions, except per piece amounts): Three Months Ended March 31, 2021 2021 2020 Currency- As-Reported As-Reported % Change Currency Neutral % Change (GAAP) (GAAP) (GAAP) Impact (Non-GAA
Slide 28: Reconciliations
Reconciliations Reconciliation of Free Cash Flow (Non-GAAP measures) (in millions): 2020 2021 Q1 YTD Q2 YTD Q3 YTD Q4 YTD Q1 YTD Cash flows from operating activities $ 2,550 $ 5,947 $ 9,283 $ 10,459 $ 4,531 Capital expenditures (933) (2,065) (3,219) (5,412) (834) Proceeds from disposals of PP&E 1 2
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